Risk sentiment remains positive as murmurings that the US Federal Reserve may slow down or pause its rate hikes keeps non-Chinese shares higher while the Middle Kingdom goes about a reset, aka consolidation of Xi Jinping’s power as Hong Kong shares crash near to their 2008 lows. King Dollar remains off its throne although the Australian dollar gave back all of its recent gains on the Chinese ructions while US bond markets saw more easing with 10 year Treasury yields moving higher above the 4.2% level at a 14 year high as bond traders position for this week’s ECB meeting. Meanwhile commodities remain mixed, with oil prices steady as Brent crude finished at the $93USD per barrel level while gold consolidated after its more than $40USD move higher to steady at the $1650USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets have sunk more than 2% with the Shanghai Composite cracking below the 3000 point barrier while the Hang Seng Index has collapsed more than 6%, cratering below the 16000 point level to lose over 1000 points in a single session! I’ve chosen the monthly chart instead of the usual daily to show how entrenched this market is, wiping out over a decade of returns – so far. Just below this level is the 2008 lows, so well done Xi Jinping! Normally this technical activity is way overdone and should result in a surge back, but Chinese markets are more, shall we say, inefficient than others, so its watch the circus unfold status for now:
Japanese stock markets conversely lifted slightly higher with the Nikkei 225 closing up 0.3% to 26974 points. Last week, 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 but that was thwarted mid-week. This is looking to set up again with the solid start to the trading week from Wall Street’s lead, but resistance overhead needs to be cleared with futures indicating a flat start today even as momentum pushes through the positive zone:
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