by Chris Becker
A mixed start to the week with the Yen dropping on the Japanese election, sending domestic stocks higher while the ASX200 had a dip after its big moves last week. All eyes are on Trump’s tax plan, which may actually have the potential to pass through Congress, but also some caution in Spain over the Catalan independence crisis, which is taking the floor out from under the Euro.
In mainland China the Shanghai Composite scraped out a slightly higher close to be 0.1% higher at 3382 points, still not quite through that key resistance level above at 3400 points. The Hong Kong based Hang Seng Index was off though, down 0.5% after stalling late last week, to be at 28332 points:
S&P futures are steady in anticipation of the usual weekend gap – and normally I’d be cautious at this sort of blowoff price pattern – but BTFD!
Japanese stocks had a very positive session following the weekend election, with the Nikkei closing up over 1% to be at 21696 points. This again takes it way above overbought levels and is being followed by the USDJPY pair which gapped up as expected on the Monday morning open, briefly touching the 114 handle. Its come back a little to be around 113.75 but still well above key resistance (the black downtrend line) but still not above the July high:
The ASX200 opened up in a positive mood but sold off throughout the session accelerating into the close to be down 0.2% to close just below 5900 points. Last week saw a significant breakout so we might be seeing some profit taking here before the next leg up to 6000.
The Aussie dollar conversely has come back a little against the USD after initially gapping down to just touch the 78 handle this morning. This could turn into a swing position up to the 78.40 level but momentum looks extremely weak here:
The data calendar starts the week slowly with a consumer confidence reading for the Eurozone and a few Treasury auctions but not much else.