Risk sentiment reversed sharply on the “not too bad” inflation data from the US overnight, with Wall Street rallying at least 2% as the USD was sold off against the major currencies, with the Dollar Index down over 1%. The Australian dollar launched straight into the high 70’s as a result with stock futures suggesting a solid positive day across Asian markets. Bond markets saw some retracing with 10 year Treasury yields down to the 2.7% level while interest rate futures were pulled back with “only” 120bps in rate rises now predicted by the end of 2022. Commodity prices moderated as oil went nowhere with Brent crude still well below the $100USD per barrel level at a three month low, while gold failed to push through the $1800USD per ounce level.
Looking at share markets in Asia from yesterday’s session, where mainland Chinese share markets are pulling back again with the Shanghai Composite down 0.5% to 3229 points while the Hang Seng Index has slumped, falling nearly 2% to close at 19610 points. Sentiment continues to wane here with the daily chart still showing considerable overhead resistance and daily momentum readings remaining negative as the moving average channel trends down. It looks like the May lows will come under pressure soon so watch for a break below the low moving average:
Japanese stock markets are also in retreat with the Nikkei 225 down 0.6% to 27819 points. The daily chart was suggesting this pause could be turning into a breakout to finally clear resistance at the previous highs at 28000 points but price action continues to bunch up around this level. Daily momentum has continued to retrace from its overbought status with the overall monthly/weekly downtrend (sloping black line above) back in play. Watch the low moving average to act as support going forward if it can translate overnight positive risk sentiment into something sustainable:
