Hope is not a good enough driver for risk markets, with Friday nights’ US unemployment print dashing expectations of sooner and larger rate cuts from the Federal Reserve. After a sharp fall on Friday, undollar assets have come back slightly in Asian trade with gold back above $1400USD per ounce while Yen was bought on the safe haven trade.
The Shanghai Composite has been flummoxed by the NFP, but also suggestions that the trade war with the US if far from over, falling more than 2% to be at 2932 points going into the close. The Hang Seng Index is also putting in a big selloff, falling 1.8% to 28257 points, breaking well below the previous set of highs at 28500:
Japanese share markets are also lower as safe haven buyers turn to Yen instead with the Nikkei 225 closing 1% lower at 21534 points. The USJDPY pair has retraced after its too far/too fast move on Friday night, falling to the 108.30 level as Yen buying accelerates:
The ASX200 was pulled back strongly from its previous record highs with a 1.2% loss to 6672 points, not helped at all by the falling Australian dollar on Friday night. The Aussie has bounced a little throughout the session to be a whisker under the 70 handle but is looking weak here going into the European session:
S&P and Eurostoxx futures are down at least 0.4% or so with the S&P500 four hourly chart showing a market in dip mode that could translate to a wider fall back to the previous highs at the 2950 point level:
The economic calendar has a few interesting releases tonight, namely the German trade balance plus industrial production numbers for May, while in the US its all eyes on the latest Treasury auctions as the world’s biggest market – bonds – remains in a yield inversion.