The big move on the return of Asian stock markets today after the New Year was cut the PBOC cutting banks’s reserve requirement ratio by 50 bps, starting next week which in effect releases nearly $1trillion in funding. At the same time, a drop to 6.96 on the official daily Yuan fix has seen risk assets rise across the region, although the closed markets in Japan negated most of this positivity.
The Shanghai Composite shot up 1% higher to 3083 points, helping consolidate well above the previously long held 3000 point resistance level, while the Hang Seng Index gapped higher and advanced nearly 0.9% higher to close at 28428 points, remaining well above the previous October 2019 highs:
Japanese share markets remain closed for the new year while what Yen traders are left around the traps are sending the USDJPY pair slightly higher on a correlated risk bid only, still hovering below the 109 handle and remaining hugely oversold after the late December selloff:
The ASX200 had a very quiet start to the year, lifting only 0.1% to close at 6690 points as concerns over the ongoing fires plus the wait until February for direction from the RBA weighed on the market. The Australian dollar slipped on the open, but is remaining just above the 70 handle, where it looks set to break going into tonight’s open:
Both S&P and Eurostoxx futures have gapped higher in anticipation of a strong bid from returning traders on both sides of the Atlantic. The small dip in the S&P500 is quite evident on the four hourly chart showing price ready to jump back into action and bounce off the former resistance level at 3200 points:
The economic calendar reopens with a slew of PMIs from Europe and the US tonight.