Stocks performed relatively well on both sides of the Atlantic on Friday night, taking a very positive lead from Asia in the final session of the trading week as Wall Street made its best advance in two years. In currency land, a surprisingly good GDP print in the UK saw Pound Sterling rise as the USD continued to be crushed against all the majors in the wake of last week’s US inflation print, with Euro pushing up through the 1.03 level while the Australian dollar also made another new monthly high to almost cross the 67 cent level. US bond markets remained relatively calm with 10 year Treasury yields still hovering above the 3.8% level while commodities were relatively firm as oil prices picked up with Brent crude finishing the week at the $96USD per barrel level. Gold had a stonking week, recovering to well over the $1770USD per ounce level for a four month high.
Looking at share markets in Asia from Friday’s session where mainland Chinese share markets surged across the board with the Shanghai Composite finishing up 1.7% to 3087 points while the Hang Seng Index skyrocketed over 7%, closing back above the 17000 point level at 17325 points. The daily chart had been showing a potential bottoming action brewing here after almost testing the 2008 lows, as the 15000 point level turned into a very solid level of support. The previous session bullish engulfing candle then set up for a clearance of overhead trailing ATR resistance and that’s where we are now with the potential to zoom straight up to the 20000 point level so watch daily momentum readings to remain overbought:
Japanese stock markets were also in buy mode, with the Nikkei 225 closing nearly 3% higher at 28263 points. The daily price chart was showing a breakout brewing as overhead resistance at the 27500 level is cleared but a few wobbles that required a better lead from Wall Street and Thursday nights stonking session gave it the confidence to put in a similar effort. The gap higher does represent both an opportunity and potential for a pullback however on a much appreciated Yen in the wake of a weaker USD so I’m cautiously optimistic here with daily momentum also nicely overbought. Support should hold at the 27500 point level however:
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