By Chris Becker
Remember to read “Trading Week“, published Saturday morning, to put these events and ideas in context.
Another interesting day as market volatility returns – this time on the upside, and in particular for the Aussie bourse, the ASX200 which jumped at the open, had some lunch and then rallied into the afternoon on the 25 bps cut by the RBA. The market has bounced above the support line I drew recently, the low experiences in the last correction in November:
The market is still in the red for the year, having gone up 1.47% today to 4043 points, but most of the pain has come from resource stocks – here’s the Aii S&P/ASX200 Resources ETF for the last 2 years:
And then the BetaShares ASX200 Financials (QFN) – not a pretty sight either – this is what happens when you concentrate your economy and market into Houses and Holes: 
In the short term, I still contend that the technical picture remains on a knife edge, and the market still requires an almighty catalyst – probably around June 17-20 (Greek elections and the FOMC meeting with The Bernank) to get things moving. I expect to see volatility between 4000 and 4120 points, with any hint or sniff of Chinese stimulus/easing/something setting off the oversold resources stocks (note that BHP was up 1.3%, WPL up nearly 4% today)
In other Asian markets, the Nikkei 225 gained 1%, joining in on the fun, but remains depressed, whilst the Hang Seng was also up nearly 1%, the Shanghai Comp is currently flat.
On to the currency markets, the USD is weakening as the Euro sees a small bounce past 1.25, whilst the Aussie surprisingly bounced on the rate cut news as hubris took over again, up nearly 3/4 of a cent to 97.93 against the USD.
Gold looked like it was going to take part in the small bounce in Asian markets but has fallen off again moving into the London trade, currently at $1616USD per ounce, whilst in AUD terms the shiny “currency” has also slipped as the AUD rises, falling nearly $10AUD an ounce to $1651AUD per ounce.
Tonight
The data flow tonight picks up again, with EMU PMI’s again, this time the service sector, with Germany and the EMU (52.2 and 46.5 expected) reporting, alongside retail sales. Meanwhile, the weekly second/third tier retail sales (Redbook and Goldman Sachs/ICSC) numbers come out but the real big one is the ISM Non-manufacturing index, with the crowd expecting a nice positive, but flat result of 53.5 points. Check out our Economic Calendar here for the rest of this week’s data prints.
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