Overnight inflation data was more in line with expectations and did settled rattled nerves on risk markets, with Wall Street actually putting in a positive session as European shares fell back in catchup mode. The USD dropped slightly against the major currencies, although it was all relative with Euro still below parity, the Australian dollar still near its recent weekly lows and only Yen higher on the defensive safe haven bid. Bond markets had some mild volatility across the yield curve with 10 year Treasury yields remaining stuck at the 3.4% level with interest rate expectations still locking in a 75bps rise at the next Fed meeting, while end of the year hikes continue to lift. Crude oil closed higher on the back of tight supply reports, with Brent up nearly 2% while gold remains hovering around the $1700USD per ounce level.
Looking at share markets in Asia from yesterday’s session where Chinese share markets had some modest selloffs with the Shanghai Composite down 0.8% to 3238 points while the Hang Seng Index slumped more than 2% lower, closing at 18847 points. The daily futures chart was showing a bearish engulfing candle which forecast the slump from yesterday with futures still indicating a lower 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 were the worst however, as the Nikkei 225 closing 2.8% lower at 27818 points. The daily chart shows this significant slump in another bearish engulfing candle wiping out all the gains of the last trading week. Daily momentum remains negative but not yet oversold so watch for some support to eventuate at the recent daily low sessions around the 27500 point level:
The full text of this article is available to MacroBusiness subscribers