by Chris Becker
Not a good start to the week for risk as Asian stocks fall in reaction to weekend news of troubles in forming a new government in Germany, combined with fallout from Chinese authorities warning about their own overheated markets. Valuations are very stretched and the usual platitudes are not suffiecent enough drivers to keep the edifice afloat.
In mainland China the Shanghai Composite sold off straight from the open and hasn’t looked back, still retreating well below 3400 points, down 0.8% to 3355 as sentiment goes negative. The Hang Seng Index is only off slightly, down nearly 0.2% to be at 29,151 points, with a case to be made for a small rounding top here on the daily chart:
S&P futures have sold off quickly, taking back most of Friday nights gains, setting up what could be a volatile night:
Japanese stocks have started poorly as well as the stronger Yen weighs with the Nikkei closing down 0.6% to be at 22272 points, just holding on above daily support at the 22000 point zone. The USDJPY pair didn’t gap down as harshly as I expected following the Friday selloff, but its still dicing with the 112 handle here, setting up for another breakdown if risk sells off tonight:
The ASX200 is basically the best performer in the region, selling off the least and closing 0.16% down to 5946 points. Last week I contended that 6000 points may prove too much resistance but there is some small buying support stepping in here, particularly for commodity players, helped along by a resurgent oil and gold price.
The Australian dollar is on the ropes once more as we can see clearly on the four hourly chart, still below former = support at the 75.80 level and starting to selloff as Europe wakes up. From here its down to 73 cents or thereabouts in my view:
The data calendar starts the week slowly with yet another speech by Super Mario in Brussels overnight, with a couple Treasury auctions to liven things up a bit.