Chinese stocks have tumbled at the end of the Chinese Magical Potion Party with the new “reforms” by Xi Jinping frighten the markets, with Hong Kong stocks losing more than 5%. This didn’t effect the rest of Asian bourses which followed the strong lead from Wall Street on Friday night as mutterings about a possible pause in US Federal Reserve interest rate hikes delighted risk markets. The USD has pulled back some of its big losses against the major currencies from Friday night but both Euro and Pound Sterling are holding on to their gains while the Australian dollar retreated back to the 63 handle. Oil prices are stable with Brent crude steady above the $92USD per barrel level while gold is trying to hold on to its on Friday night gains, still back at the last week high around the $1650USD per ounce level:
Mainland Chinese share markets have sunk nearly 1.5% with the Shanghai Composite cracking below the 3000 point barrier while the Hang Seng Index has collapsed more than 5%, cratering to below the 16000 point level, losing nearly 1000 points in a session. Japanese stock markets conversely have lifted slightly higher with the Nikkei 225 closing up 0.4% to 27017 points, while the USDJPY pair is trying to stabilise after its epic volatile session on Friday night, just below the 149 level:
Australian stocks followed the Friday night Wall Street surge with the ASX200 closing more than 1.5% higher, getting back above the 6700 point level to start the week at 6779 points. The Australian dollar however has given back nearly half of those gains from the last session, back down to previous resistance now possibly support at the 63.30 level:
Eurostoxx and US futures are drifting sideways as we head into the London session, with the S&P500 four hourly futures chart showing price action pausing at the 3770 area after the big surge on Friday night, still failing to get back to the 3800 point level. Medium term and possibly psychological long term resistance at the 4000 point level is a distant memory, but this does set up another attempt as short term momentum remains overbought:
The economic calendar starts the week with a big round of flash manufacturing and services PMIs for UK, EU and US.