By Chris Becker
A very strong non-farm payroll (NFP) report on US unemployment on Friday night did not help the nascent recovery on equity markets. US markets fell around 1% after gaining more than that on almost every session during the week, with the USD reversing what had been a steep selloff against the major currencies from mid week onwards. It’s clear as a bell that the US economy is now overcooked, so the Fed will not hesitate to normalise rates even further, just as the political, legislative and macro risks get higher and higher. The correction may not yet be over….
Looking at Chinese stocks first, last week saw the Shanghai Composite bounce back after finding somewhat of a bottom below what was terminal support at the 2600 point level, finishing the week slightly above. The weekly candle is much more positive this time, as is momentum, but the signal so far is only a swing one – a short term bounce up to the high moving average or so at 2800 points:
