by Chris Becker
The Santa rally continues in Asia, this time with Chinese stocks riding the sleigh as risk becomes more and more optimistic of a GOP bill passing before Christmas. Japanese stocks were a little wobbly as the Yen waned a little but overall its a positive session leading into the overnight trade.
In mainland China the Shanghai Composite has bounced back from its poor Monday start, lifting over 0.5% to be at 3287 points, still shy of critical key support at the 3300 point level. The Hang Seng Index is building on yesterday’s gains, up 0.8% to be solidly above 29000 points and almost but not quite making a new daily high. Its still under somewhat of a cloud from its early November too fast breakout and subsequent correction, but this is looking promising:
S&P futures are in line with last night’s session highs and there’s no downside expectation so far, so more records on the way?
Japanese stocks are down slightly as the Yen firms with the Nikkei 225 off a fraction, or 0.15% to 22868 points, still unable to close above overhead resistance at 23000 points. The USDJPY pair lost some ground overnight and took back about half to be at the 112 mid handle area with no clear direction today. If the daily/weekly pattern is still to be trusted, we should see a USD rally here that takes the pair back up to the higher range above the 113 handle, but note how momentum remains negative here on the four hourly chart:
The ASX200 continues to push higher with all the bears wiped aside, up 0.5% or 33 points to 6071 as the banks continue to lead the way. BHP and RIO both helped with both iron ore majors up 1% or more, with the only bad sign on the bourse Retail Food Group which wiped out another 25% today!
The Aussie dollar continues to remain elevated here with little negative reaction to the RBA minutes, still hovering above the mid 76.50 level against the USD. While momentum remains positive, the USD is coming back and is likely to go higher once the tax bill is passed, so we could see a retracement here back to the 76 handle:
The economic calendar continues tonight with a slew of minor reports surrounding US housing, with most of the focus political as the GOP tax bill comes under the spotlight again.