Macro Morning

The Bank of England followed the Fed overnight with an outsized interest rate rise, warning a two year long recession is underway, yet the FTSE rallied as European stocks fellback and the NASDAQ lead another selloff in tech stocks. The USD remained strong against the majors despite a less than impressive services PMI with Euro retreating down to the 97 level, with the Australian dollar also continued its falls to be below the 63 level. US bond markets saw more curve flattening with 10 year Treasury yields pushing through to the 4.15% level while commodities were mixed with oil retracing slightly as Brent crude pulled back from the $95USD per barrel level while gold was crushed under pressure to almost finish at the $1600USD per ounce level.

Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets are pulling back slightly after their recent sharp rebound with the Shanghai Composite down around 0.3% to just below 3000 points while the Hang Seng Index has slumped again, down more than 3% but still above the 15000 point level at 15339 points. The daily chart was showing a potential bottoming action here but as I warned it was questionable if it was sustainable or just short covering. Just below this level is the 2008 lows, as the 15000 point level remains a battleground – watch for another close above the high moving average here as a sign the swing play has more potential:

Japanese stock markets were still wavering with another scratch session as the Nikkei 225 closed 0.1% lower at 27663 points. The daily price chart was showing a possible breakout brewing here under overhead resistance at the 27500 level however the poor lead from Wall Street and mixed fortunes in China explains the hesitation. Futures are indicating a flat end to the trading week, with momentum likely to retrace from overbought levels but watch price action if it breaks below the low moving average which would signal an end to the October bounce: