Risk markets stopped their falls overnight but remain extremely cautious as we head into the Jackson Hole central bank conference with some disappointing US PMI data stirring the pot on how strong the Fed will continue to react to the inflation/growth imbroglio. The USD pulled back against most of the majors, with Euro briefly getting back above the parity barrier before retracing, with a similar story for the Australian dollar although it did manage to stick above the 69 cent level as commodity prices lifted strongly. Bond markets fluctuated with 10 year Treasuries remaining above the 3% level while interest rate futures slipped a little, but still showing more than 60bps rise at the next Fed meeting. Crude oil finally broke out of its funk, with Brent crude lifting more than 3% to just get back to the magical $100USD per barrel level while gold whipsawed around to still remain below the $1850USD per ounce level.
Looking at share markets in Asia from yesterday’s session, where mainland Chinese share markets held on to their previous gains with the Shanghai Composite treading water at 3274 points while the Hang Seng Index is still going backwards, down 0.8% and well below the 20,000 point level at 19503 points. The daily chart is still showing considerable overhead resistance and daily momentum readings remaining into oversold mode as the moving average channel accelerates lower without any upside pressure. The May lows are coming under pressure with another break below the low moving average likely:
Japanese stock markets were also big losers with the Nikkei 225 closing 1.1% lower, well below the 29000 point level at 28452 points. The daily chart is showing a very abrupt reversal here as the 29000 point level has turned into strong resistance. Momentum has crossed over so a swing short play down to trailing ATR support at the 28000 point level is likely underway:
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