A reversal of the UK’s recent economic “plan” plus strong earnings on Wall Street saw stocks on both sides of the Atlantic surge overnight, with the USD falling against most currencies except Yen as a result of the risk on mood. US bond markets rallied, taking their lead from the reversal in UK gilts after the backflipping of Truss’s ridiculously bad tax cuts, which meant 10 year Treasury yields down to the 3.9% level before easing off to finish right on 4% at the close. Meanwhile commodities were mixed, with oil prices still hovering around their recent lows as Brent crude remained below the $92USD per barrel level while gold is still under pressure despite more positive moves in other undollars, currently trading at the $1650USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were the best relative performers with the Shanghai Composite down slightly at first before a late rally saw it close 0.4% higher to hold above the 3000 point barrier while the Hang Seng Index tried to get out of sell mode, down 1% at one stage before finishing in the green, up 0.1% to 16612 points. The daily futures chart however is still showing a deep bear market in place, although there is some price deceleration evident here around the 16500 point mid level. As I said last week following the failure of the recent dead cat bounce, the subsequent break below the 17000 point level is likely to accelerate the selloff, but that could change if any price action breaks above the high moving average:
Japanese stock markets also moved lower, with the Nikkei 225 closing down 1.1% to 26775 points. The daily price chart shows a possible breakout brewing here under overhead resistance at the 27500 level in this second bounce of the dead cat that may actually prove more lively. Futures are indicating a better start for today’s session given the big bounce on Wall Street although daily momentum remains negative:
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