Without any catalysts or surprising data prints, another relief rally on Wall Street overnight has lifted expectations across the risk complex, although it is starting to fade as the Asian trade opens this morning. The USD continued to give back some of its recent gains with Euro and Pound Sterling remaining firm near their highs while the Australian dollar stayed below the 68 cent level. US Treasury yields lifted slightly with the 10 year yield pushed back above the 3.6% level while the commodity complex saw oil prices stabilise finally, with Brent crude lifting above the $77USD per barrel level as gold couldn’t hold near the $1800USD per ounce level and slumped down to $1780.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets are sliding going into the close with the Shanghai Composite now below the 3200 point level, down 0.5% at 3190 points while the Hang Seng Index has retraced sharply, taking back its end of week gains to be down 2.1% at 19473 points. The daily chart was showing a perfect breakout here with a big surge up towards the 19000 point level, with more potential upside here to start the new trading week. However buying exhaustion is setting in so watch support to remain strongly defended at the 17600 area but the low moving average to come under pressure next:
Japanese stock markets are meandering along without much buying activity, with the Nikkei 225 down 0.2% at 27842 points. The lack of a clear lead from Wall Street combined with heavy resistance at the 28400 point level had turned this pause into a rollover into short term support but the late week rally saw price bounce off that level. The daily chart shows this pullback is possibly finished here if ATR support can be defended at the 27500 point level with futures indicating a probable bounce:
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