Australian Shares

By Chris Becker  Looking at Chinese stocks first, where last week saw the Shanghai Composite again fail to stabilise above tentative support at the 2600 point level, as economic news disappointed.

Not a positive way to finish the week here in Asia with a broad selloff due to the slowdown in Chinese economic data, with the Aussie and Kiwi falling alongside all the Yen crosses.

Via the excellent Bill Evans at Westpac today: What do our economic forecasts for 2019 mean for Investors?

Via UBS: …Labor’s proposed franking ‘scale-back’ also makes the near-term return of excess franking credits more attractive.

By Chris Becker Caution reigned on risk markets overnight with the ECB meeting taking a dovish turn while currencies were largely unchanged alongside the other barometer, US Treasury yields although the 10 year remains under the previous “magical” 3% level.

An very positive day for risk assets here in Asia as the USD continued its retreat against the majors except Yen, helping domestic Japanese stocks while Chinese bourses finally played catchup and have lifted significantly, especially on the mainland.

As John Kehoe observes today: The RBA’s fingerprints are all over the CFR statement, which says “an overly cautious approach by some lenders to incorporating relevant laws and standards into loan approval processes may be affecting lending decisions”.

By Chris Becker The nascent recovery on risk markets continued overnight with US stocks rebounded strongly before fading going into the close on the back of a possible resolution or at least fading of problems in trade with China and the USA.

An even better return to risk here in Asia today with most stock markets lifting, while the USD remained quite strong against the major currencies, the Kiwi and Aussie in particular retreating.

Yesterday I noted how disconnected valuations have become from the immediate risk environment: First, the world EPS growth outlook: And valuations: There’s lot of discounted risk in those numbers.

Risk is up and this is why, via CNBC: A Vancouver judge set a $10 million CAD bail ($7.5 million U.S.) for Huawei Chief Financial Officer Meng Wanzhou Tuesday, capping a week of increasing trade tensions and strong market reactionsaround the dispute between the Department of Justice and one of China’s largest hardware companies.

By Chris Becker Volatility was the name of the game overnight on risk markets with European bourses rebounding while US markets exchanged gains for losses although the broader S&P500 finished with a scratch session.

A mixed result following the very late rally on Wall Street overnight with Japanese stocks retreating while the rest of Asia had minor gains, showing a distinct lack of confidence across the region.

What are spooked stock markets discounting?

The AUD is holding up this morning despite the NAB survey swoon: Bonds are consolidating after the big bid.

The Australian says: Escalating China-US trade tensions pummelled the Australian sharemarket yesterday, pushing the local bourse to record its third $35 billion-plus wipe-out in as many months.

By Chris Becker After a solid session of selling in Asia yesterday, European stock markets lost all their confidence later in the session as PM Theresa May lost her bolt on the Brexit vote, sending Pound Sterling down to a new low for the year.

It’s been a relatively good finish to the trading week here in Asia despite epic overseas volatility with stock markets putting scratch sessions or slightly higher closes.

By Chris Becker US markets reopened and immediately went into sell mode overnight, down nearly 3% in mid-session before a late rally saw prices recover to a scratch session.

It’s been a straight risk-off session here in Asia as the Huawei headlines are fracturing the possibility of a trade deal between the US and China, fueling safe haven bids and dumping of stocks.

Via the ABC: Canada has arrested Huawei’s global chief financial officer in Vancouver, where she is facing extradition to the United States on suspicion she violated US sanctions against Iran, reports say.

By Chris Becker Risk markets were helped overnight due to the US holiday although European bourses caught up to the previous Wall Street carnage, like in Asia yetserday the falls weren’t as strong.