ASX Shares Daily – August 1

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By Chris Becker

These daily updates need to be placed in context with the longer trends and drivers amidst the overall technical picture, so head to Macro Investor for a free trial. Former “Trading Week” readers will find it reborn asTechnicals“, published 8.30am each Monday morning.

Bizarro world on equity markets in Asia today as the mainland Chinese market surged and peripheral markets tanked, as PMI’s in all countries indicate a slowdown. As I expected, the ASX200 had a small setback today, but smaller than I thought, only down 0.1% or 6 points to 4262 – check the bottom of the post for a full roundup including technical analysis of the bourse itself.

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The Nikkei 225 was down over 1% but came back to be only down 0.6%, hitting resistance at the 50 day moving average, but the AUD/JPY cross was up, also hitting resistance but more likely to breakout:

The Hang Seng didnt go anywhere today, it was the Chinese bourses all making gains, up 1-1.5%, with the Shanghai Comp up  0.9% to 2123 points. Now, I don’t want to call this a bottom – its a bit like a property analyst saying one quarter result means the end of a multi year trend…..

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In other Asian markets, the Singapore STI finished in the green, still hitting resistance around the 3000 point region, wanting to break out, the KOSPI was flat and Indian markets are putting on some small gains.

On currency markets, the Aussie gave day traders some excellent gains, but in aggregrate went nowhere, falling below 1.05 on the PMI releases and then surging in the afternoon from 1.047 to currently be at 1.052 moving into the European session.

The Euro/USD is gaining strength as well, now over 1.23 against King Dollar forming an uptrend from Monday’s lows. The US Dollar Index (DXY) is reflecting this back and is now at 82.5 points.

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Gold (USD) is still going nowhere – move dammit! Everyone is waiting for NFP, ECB and FOMC meetings later in the week. Now at $1616USD per ounce level and in AUD terms the weakness continues, as the currency remains strong, currently at $1535AUD per ounce.

Aussie bonds were sold off slightly again today, the 10 year yield currently just above 3.1% – Euro bond markets have opened and its an interesting situation. German bunds are being sold off – up 5 points, whilst Italian bonds are down 11 points and Spanish down 6 points. This is going to be an interesting night.

Australian Stocks

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Looking to the table at the left showing all the sectors and ASX8 stocks (the top four banks – Megabank – and the top four miners), the best mover was Telecomm – i.e Telstra (TLS) which broke out above $4 – the first time since December 2008!

The main action in the ASX8 was Rio Tinto (RIO) again, up 0.6%, with BHP down 0.7% – both on news of staff rationalisation? hmm again.

As to the index itself, today’s action should be seen in the context of a bigger picture. The breakout above the closely watched 200 day moving average recently needs to be confirmed with a break of the key level of 4400 points. The current breakout is looking eerily like the false breakout back in May:

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Lots of waiting going on….

Chris Becker is an investment strategist at Macro Investor, Australia’s leading independent investment newsletter covering stocks, trades, property and fixed interest. Each week Macro Investor publishes tables on the top ten most undervalued and overvalued stocks on the ASX. A free 21-day trial is available at the site.

You can follow Chris on Twitter.

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