Macro Afternoon

by Chris Becker

Stocks were broadly positive across Asia today taking the good level from US stocks overnight, with the USD weakening against the majors and gold, which is closing back in on the $1300USD per ounce level. The lack of economic and geopolitical catalysts are definitely calming markets this week.

In mainland China the Shanghai Composite is having a pause, falling nearly 0.3% going into the close at 3379 points, hitting and rejecting that key resistance level at 3400 points.  The Hong Kong based Hang Seng Index is making good on its own pause and lifted 0.4% higher to be at 28499 points, still above local resistance at the 28000 point level and looking to break higher:

S&P futures are relatively steady again with a melt up higher as support and resistance remain very clear on the four hourly charts:

Japanese stocks continue to do well despite the stronger Yen with the Nikkei up another 0.35% to close out at 20954 in what looks like a crazy move higher that has to blowoff soon . The USDJPY pair is slowly melting down to the 112 handle after going sideways last night, so it appears the correlation between Yen and stocks is broken. I’m target the 112 handle proper for a breakdown where 108 is the target on the daily and weekly charts:

The ASX200 had another good session and closed 0.4% higher  at 5794 points, almost cracking 5800 points and staying well above the 200 day moving average. The Aussie dollar continues to surprise with another blip higher through the session, now slightly above the 78 handle, and if it breaches overhead resistance, I’ll have to change my bearish mind here!

The data calendar includes two things of note, namely US initial jobless claims and then a talk by ECB chief Mario Draghi in Washington.

Comments

  1. Assume that the carry trade is still the key here until the US actually raises rates.Traders must continue to faithfully believe the RBA will raise rates twice next year – ie they believe NAB etc
    I/O dropping, IMF downgrades etc is being looked through on the relative strength of our economy LOL

    • GunnamattaMEMBER

      The AUD here has steamed up to 7830 in about 12 hours I reckon (from under 78). I do find myself wondering what drives it thus given the things you refer too. I agree with HnH that we will likely lose an A soonish too.

      In fact while I wrote that I reckon it slipped into parabola mode – has Trump repudiated US debt or somehting?

      • Dunno but I/O did catch a bid about 30mins before session end (up about 4% then moderated back – towards the end of each session heavy buying seems to kick in almost like someone is propping things up). Copper seems to have a bit of an AUD correlation and it has been up again.

        Not sure what the physical I/O price has done today.

        One report even suggesting that “Along with a softer greenback, the Aussie was also helped by a stronger-than-expected Australian housing finance report for August released earlier in the session, seeing it hit a high of .7823 in recent trade”

  2. truthisfashionable

    Paul Clitheroe on ACA tonight talking sense about debt.. using a 58yo lady as an example on what not to do. Sounds like she is going to need to get tenants in just to cover the mortgage payments, so next year on ACA – scum bag tenants rip off woman who just needed help paying the mortgage.

  3. Mining BoganMEMBER

    This is interesting. This new law will work in complete contrast to the ABCC. Lots of people died under the old ABCC. It was designed so that safety standards could be bypassed.

    https://au.news.yahoo.com/qld/a/37444638/industrial-manslaughter-bill-passes-in-qld/

    “The government was forced to scrap plans to extend the measures to the mining sector after the Queensland Resources Council threatened to campaign against it at the next state election.”

    Cowards.

  4. https://www.nytimes.com/2016/04/13/world/americas/canada-vancouver-chinese-immigrant-wealth.html?_r=0

    “On a recent evening, an overwhelmingly Chinese crowd of young adults had gathered at an invitation-only Rolls-Royce event to see a new black-and-red Dawn convertible, base price $402,000. It is the only such car in North America.

    Among the curious was Jin Qiao, 20, a baby-faced art student who moved to Vancouver from Beijing six years ago with his mother. During the week, Mr. Jin drives one of two Mercedes-Benz S.U.V.s, which he said were better suited for the rigors of daily life.

    But his most prized possession is a $600,000 Lamborghini Aventador Roadster Galaxy, its exterior custom wrapped to resemble outer space. Mr. Jin, a lanky design major who favors Fendi clothing and gold sneakers, extolled the virtues of exotic cars and was quick to dismiss those who criticized supercar aficionados as ostentatious. “There are so many rich people in Vancouver, so what’s the point of showing off?” he said.

    Asked what his parents did for a living, Mr. Jin said his father was a successful businessman back in China but declined to provide details. “I can’t say,” he stammered with evident discomfort.

    Because of high import and luxury taxes in China, supercars are often 50 percent cheaper in Canada. And in Canada, Chinese immigrants said, people are far less likely to question how they obtained their wealth.

    “In Vancouver, there are lots of kids of corrupt Chinese officials,” said Shi Yi, 27, the owner of Luxury Motor, a car dealership that caters to affluent Chinese. “Here, they can flaunt their money.”

    Some Chinese immigrants think a supercar is a poor investment, because its value decreases over time. “Better to spend half a million dollars on two expensive watches or some diamonds,” said Diana Wang, 23, a University of British Columbia graduate student who said she owned more than 30 Chanel bags and a $200,000 diamond-encrusted Richard Mille watch.”

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