Outside Australia is a sea of red again on stock markets with Chinese and Japanese bourses losing 2% or so to start the week on a very bad note. German political tensions over the EU immigration deal are falling over into markets with bigly potential for serious corrections across the risk complex as the global trade war heats up.
The Shanghai Composite is in free fall, down over 2% to be well below the next level of support at 2800, closing at 2787 points. The Hang Seng Index was closed thankfully.
S&P futures are off by at least 1% with the Eurostoxx indicating at least a 1.3% gap down on the open tonight in Europe. The four hourly S&P chart shows how such a dip will take the US markets back to their session lows of the previous week and ready to break below key support at 2700:
Japanese stocks have finally cracked with the Nikkei 225 closing 2% lower to 21811 points, taking out daily ATR support at the 22000 point level. This sets up for a correction in line with other markets unless the USDJPY can rally hard:
The USDJPY pair is looking very toppy here with a breach of the 111 handle earlier in the session sold off strongly on a safe haven bid Yen. I’m skeptical but this has the makings of a reversal, so I’d watch the low moving average/trendline area at the 110.55 level
The ASX200 is still holding on – miraculously -down only 0.3% to 6177 points as the rest of the region sells off in magnitude. The Aussie dollar reversed most of Friday night’s gains, heading straight back below the 74 handle and about to crack its low moving average on the four hourly chart. This is setting up for a return to last week’s lows down near the 73 handle as short sellers move in again:
The data calendar starts the week with a big one – ISM Manufacturing for June.