A slew of inflation measures across Europe and Brexit-land and firmer Fed interest rate expectations spooked risk markets a little overnight, leading to a pullback on Wall Street despite good earnings. King Dollar came back against most currencies after its recent reversal, although Yen continues to sell off. US bond markets sold off with 10 year Treasury yields pushing above the 4.1% level. Meanwhile commodities were mixed, with oil prices firming after their recent pullback as Brent crude climbed back above the $92USD per barrel level while gold cratered after lots of pressure around the inflation prints, slumping to the $1630USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets retraced sharply going into the close with the Shanghai Composite down more than 1% to 3044 points while the Hang Seng Index also fell quickly after recent moves higher, down 2.3% and well below the 17000 point level, closing at 16511 points. The daily futures chart however is still showing a deep bear market in place, with price deceleration no longer evident 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 with a new low settling the case:
Japanese stock markets did more of the heavy lifting but retraced at the close as well, with the Nikkei 225 up only 0.3% to 27257 points. The daily price chart was showing a possible breakout brewing here under overhead resistance at the 27500 level in this second bounce of the dead cat that could have more traction as Yen depreciates sharply against USD. Futures are indicating a mild pullback for today’s session as daily momentum pushes through the positive zone:
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