Macro Afternoon

As expected, it hasn’t been a good start to the week for Asian stock markets as the new round in the US trade war with China squashes all evidence of confidence that had been building up previously. Currency markets are feeling the heat too, with gold breaking out to a new daily high while its a new record high for offshore Yuan, now trading well above the 7 handle:

Meanwhile, the Shanghai Composite has fallen over 1%, building on its woes from Friday and currently at 2831 points while the Hang Seng Index has gapped down again, dropping a further 2.8% to 26171 points. This is far more than expected and puts it on track to take out the January lows at 25000 points:

Japanese share markets are doing nearly as bad, with the Nikkei 225 off by nearly 2% to close 1.7% lower at 20720 points. This is not being helped by big bids in Yen with the USDJPY pair well through the 106 handle here and not looking back:

The ASX200 has not escaped the carnage today, falling nearly 2% as the iron ore price weighs on miners, closing at 6640 points and almost at my downside target. The lower Australian dollar isn’t helping as it did on Friday, below the 68 handle again and ready for another breakdown:

S&P and Eurostoxx futures are off down at least 1% going into the European session with the S&P500 four hourly chart looking to break below the next support level at 2900 points, which takes out the 2018 high:

The economic calendar starts the week out with US non-manufacturing (services) PMI print for July tonight and then NZ unemployment first thing in the morning.

Comments

  1. Given the widespread nature of the bearishness I think this is gonna be pretty big. I’ll be surprised if the ASX stays above 6600.

  2. 2015/16 reflationistas probably curled up and wept for most of today. China taking the trade war into open hostilities and popping a currency war cherry on top… It’s not exactly the stuff of Shanghai Accord’s and globally synchronized love-ins.

      • for kicks and giggles to make the world laugh at us – our bullets are blanks anyway. It will trigger bank runs this is side of Christmas so will be fun to watch.

  3. The Traveling Wilbur

    Poo is currently, really, finally getting flushed. Now. 11 pips to go. Just 11.

    • The Traveling Wilbur

      Was wondering about that, but IO went sooooo high that surely China would need to decide to stop buying Aus IO selectively (or suffer a revolution) for the ToT to bottom out that badly?

  4. The Traveling Wilbur

    Well, we’ve identified the first three signs of the seven signs of the apocalypse:

    1. Kouk posts rates are going to go up.
    2. flawse just posts.
    3. Tissues are bid. Go long Kleenex.

    Yesterday, up .21% of all days.
    https://nasdaq.com/symbol/kmb

  5. A lot going on in the world atm, not sure what to think. While we need a reset this one will be of nightmares not seen by gen BB or younger by the looks of it, the elastic is that far stretched who knows where this will go.

  6. The Traveling Wilbur

    Oh. Nearly forgot.

    All the 2015 St Hugo Coonawarra Cab Sav in Brisbane is now @ my place. Ditto a fair chunk of the last of the 2017 Taylors. Night chunts.

    • “This would see a further weakening in global growth, leading to reduced export earnings for Australia which would in turn boost unemployment, risking another leg down in house prices,” he said.

      Jesus, we are walking into GFC2 and all Oliver can say is that the resultant loss of employment will hurt house prices. We are doomed.

  7. C.M.BurnsMEMBER

    the calibre of the ex-player(s) that Langer can draw on to be assistant coach is a testament to how Langer is considered amongst the Australian (retired) cricket fraternity.

    One Day World Cup: hey Punter, what are you doing for a few months over the middle of 2019 ? Want a temp gig ?

    Ashes in England: hey Steve Waugh, what are you doing for a few months over the english summer ? Want a temp gig ?

    That’s an enviable roll-call of assistant coaches