Chinese stock markets surged on scuttlebutt that the COVID zero policies maybe coming to an end against the backdrop of capital flight due to the latest CCP hand waving. While sentiment remained positive in Asia and then Europe, Wall Street continued its retreat from its big surge from Friday, as the latest ISM manufacturing print firmed expectations of the upcoming Fed interest rate hike being a big one. The USD is still too strong against the majors with Euro retreating well below the 99 cent level, with the Australian dollar also eventually weakening overnight. US bond markets saw more curve flattening with 10 year Treasury yields pushing through to almost the 4.1% level while commodities did much better, especially base metals while oil prices lifted as Brent crude pushed through the $93USD per barrel level. Gold is still under pressure but managed to lift above the $1640USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets rebounded sharply after their recent sharp falls with the Shanghai Composite up nearly 2.7% to 2969 points while the Hang Seng Index has soared epically higher, up more than 5% to get back above the 15000 point level at 15455 points. The daily chart shows how swift this recent decline has been, wiping out over a decade of returns, with this sort of upside volatility not unexpected in such a move – but is it sustainable or just short covering? Just below this level is the 2008 lows, as the 15000 point level becomes the battleground between authorities stepping in and sellers wanting to move their money out:
Japanese stock markets are the only sour note in the region with the Nikkei 225 closing just 0.2% higher at 27651 points. The daily price chart was showing a possible breakout brewing here under overhead resistance at the 27500 level and this is trying to happen with the solid if not exciting start to the trading week. However the poor lead from Wall Street and mixed fortunes in China is still showing hesitation with futures indicating a flat start, albeit just above recent resistance levels. Momentum is also still quite positive and price hasn’t broken the low moving average either:
The full text of this article is available to MacroBusiness subscribers