Macro Morning

Well the inflation genie won’t get back in the bottle with a stonking US CPI print overnight setting off every sell trigger on Planet Risk. Wall Street fell more than 4% across the board, with futures indicating a bath of blood here in Asia on the open. Headline CPI rose to 8.3% year on year, which put a fire underneath the USD which had been suffering a minor reversal of late. Euro was slammed back below parity while the Australian dollar suffered a greater loss to return to its weekly lows. Bond markets saw similar action with 10 year Treasury yields spiking higher to the 3.4% level with interest rate expectations zooming higher, with the 75bps rise at the next Fed meeting locked in while more added to the end of the year. Crude oil eventually closed lower, with Brent losing nearly 2% while copper and gold both lost 1%, the latter pushed back down to the $1700USD per ounce level.

Looking at share markets in Asia from yesterday’s session where mainland and offshore Chinese share markets returned from their holiday with the Shanghai Composite up slightly to 3264 points while the Hang Seng Index was up as well before closing 0.2% lower at 19326 points. The daily futures chart shows a bearish engulfing candle (as does almost every equity chart below) that is forecasting some steep falls on the open today. The lack of buying support here to follow through the recent nascent swing is still telling with daily momentum nowhere near out of its negative funk:

Japanese stock markets continued to add to their previous gains yesterday, but with more modest returns as the Nikkei 225 closed just 0.2% higher at 28614 points. The daily chart is showing a return back above previous trailing ATR support level at the 28000 point area as price wants to head back to the early August highs but futures are suggesting a swift reversal of sentiment. Daily momentum is likely to head back to oversold settings, as this swing play is over with another steep fall likely on the open: