Macro Afternoon

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by Chris Becker

Markets in Asia are getting squished as a result of the “shock” fall in US stocks overnight. Red across the board while the flight to safety sees bonds bid up high with Treasuries down to nearly 2.4% and Aussie issues off four points to 2.77% as the Aussie dollar moderates its falls from last night.

The Shanghai Composite is down nearly 1%, in line with other bourses, currently at 3234 points just after the long lunch break. Local support at 3200 level is not far away and may come under threat before the close. The Hang Seng Index is off 1.5% to 24323 points, also just above recent resistance, now support at 24000 points. As I mentioned yesterday that this was looking a little overstretched with a pullback to the high moving average and that’s what we’ve got – but watch the low for a possible breakdown:

HSI.fsDaily

Japanese stock markets are off the most, with the Topix and Nikkei both off nearly 2%, the latter down to just above the 19000 point level. While this is a big move down its still stuck in a tight support/resistance zone as Yen remains strong. The domestic currency remains firm against USD after the big breakdown in USDJPY with a small bottom forming here at the 111.60 zone. Its ripe for a bounce back up to the 112 handle or so, but that could be short lived as the safe haven bid in Yen remains strong:

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USDJPYH4

S&P futures are slipping after last nights selloff with confidence dissipating left and right:

S&P.fsH4
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The ASX200 broke down at the open and sold off all session, closing 1.6% to 5684 points, going below my expected target of 5700 points, where support has been previously. This is ominous as its was financials that led the charge, all down over 2% with mining stocks close behind. Tonights session in the DAX and of course across the pond will be crucial to restore confidence here.

The Aussie dollar is JUST holding on to support on the four hourly chart, still below the 77 handle proper against USD but ready to crack to a new level and the yield spread tightens:

AUDUSDH4
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The data calendar continues with some ECB speeches, plus DOE oil inventories and US home sales overnight.