Jump to content

JasmineC

IG Moderator
  • Content Count

    203
  • Joined

  • Last visited

Community Reputation

22 Excellent

About JasmineC

  • Rank
    Regular Contributor

Recent Profile Visitors

The recent visitors block is disabled and is not being shown to other users.

  1. JasmineC

    Dividend Adjustment 15 Oct - 22 Oct

    Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 15 Oct 2018. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral adjustment on your account. Special Divs are highlighted in orange. Special dividends You can see the special dividends listed below. Unfortunately we do not have granular insight on the effect on the index for the index in question, however the below maybe helpful for some. Please note the dates below are the stock adjustments in the underlying individual instrument, whilst the index div adjustments are taken out the day before on the IG platform at the cash close. Index Bloomberg Code Effective Date Summary Dividend Amount AS51 APO AU 19/10/2018 Special Div 42.8571 How do dividend adjustments work? As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is affected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  2. Rout over? There are tentative signs that the global equity rout witnessed last week has subsided, at least for now. The tone shifted during Asian trade on Friday, and despite a weak day for European markets, Wall Street ended the week on a positive note, led by a bounce in the major tech stocks. It’s not to say that there isn’t the risk that this sell-off may not continue at some stage this week: in fact, futures markets are indicating a sluggish start for Asia today. More to the point, the fundamentals haven’t changed and the concerns that precipitated the tumble in share markets are still there. True, bond yields are now 10 points down off their highs and some positive news about the trade war and Chinese growth boosted sentiment on Friday. But neither of these issues have disappeared and will almost certainly rear their head again. Fundamentals haven’t changed: The crux of the matter is that, as has been repeated ad nauseum, interest rates in the US are going higher and that seems very unlikely to change. The growth story in the US is so strong that the Fed feels compelled to keep telling us so, as it apparently prepares markets for the inevitable end of the easy money era. If this is the case, then maybe the kind of wild bursts of volatility above 20-25% (if assessed against the VIX) sporadically is the new norm. Markets have seen two bouts of it this year already, largely due to the same structural factors, though it must be said that provided we’ve arrived at the end of this sell-off, the impacts were much smaller than February’s. Nevertheless, assuming continued strength in the fundamentals, a more turbulent journey on this bull-run could become the status quo. A sell-off, not a correction (yet): Once again: this assessment is entirely predicated on the belief that this pull-back has come to an end, which with a high-impact week ahead of market participants, is less than guaranteed. There may be an element of being at a cross-road now, though it’s almost always impossible to tell whilst moment whether this is so. Despite the opacity of the current market conditions, defining what’s so far been seen is appropriate, especially to provide perspective regarding the panic some have felt toward the notion of a “correction” in the market. Different geographies and individual indices must be judged differently, but if Australian and US markets are the yardsticks, neither are at a technical correction phase yet. A true correction is a sell-off of over 10 per cent from highs, something the major US indices nor the ASX has experienced yet. ASX: SPI futures are pointing to a soft start for the week for the ASX. The last price on that contract is indicating a 51-point drop at the open, furthering last week’s rather heavy losses. First glance suggests that the drop-in financials stocks on Wall Street, which fell by way of virtue of the pullback in US Treasury yields, and despite strong earnings updates from JP Morgan Chase & Co. and Citigroup Inc, will follow through to the Australian share market today. The boost to US tech stocks may bode well for the pockets of growth stocks in information technology and healthcare within our market, as too may the slight lift in industrial metals prices and oil over the weekend. However, even considering these modestly improved fundamentals and a solid lead from Wall Street, perhaps the break of a technical medium-term uptrend on Friday has tipped the balance of activity in favour of the sellers. China and greater Asia: Being a Monday, the Asian region is at risk of witnessing a lack of volume on the markets today, on the back of a US session Friday that experienced a 30 per cent lift in its average volume. That could make markets sputter a little, however several events and a general positioning for the week could turn that around. An impetus will need to come out of China to see noteworthy shift in sentiment, be that bullish or bearish, as traders attempt reform their views on the Chinese growth story. That narrative received a much-needed boost during last week’s final trading session, after the release of much better than expected Chinese Trade Balance data assayed some concerns relating to the impact the trade war is having on Chinese growth – a belief that will be tested throughout the week by a slew of Chinese fundamental data releases. Fundamental economic data: Fundamental data will be abundant in the week ahead for market participants, both domestically and abroad. Interest rate traders will be treated to insights from the RBA in tomorrow’s RBA Monetary Policy Minutes on Tuesday, FOMC Minutes on Thursday morning (AEDT), along with several speeches from central bankers throughout the week. Volatility in currency, money and credit markets was nowhere near the levels registered on share markets last week, although a safe-haven plays into US Treasuries, the Yen and Gold has emerged. Given the primary cause of Thursday’s major sell-off can be tied back to interest rate expectations and activity in US Treasuries, the FOMC’s minutes will probably be the most watched event. The yield on the benchmark US 10 Year Treasury note is down to 3.16 per cent currently, 10 points below the highs that ignited the stock market sell-off: an overly hawkish tone in the Fed’s minutes a risk of bringing a return to this dynamic. Political economy: Geopolitical risk will lurk in the background to the week’s trade, threatening to dull risk appetite above and beyond the uncertain fundamental outlook for markets. A Brexit deal could eventuate this week, in what could amount to the final round of talks between the UK Government and European bureaucrats. An eye on China and particularly its handling of the Yuan could be a hot-point, after the US Treasury department opted not to label the Chinese policymakers as currency manipulators, catalysing a rally in the Yuan, before the PBOC intervened and enacted another controlled devaluation on Friday. Finally, fears of disruption in the middle-east and therefore oil markets could flare-up, as relations deteriorate between Saudi Arabia and the global community on the increasing possibility that the Saudi’s brutally murdered a anti-establishment journalist within the Saudi Arabian embassy in Istanbul. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  3. What happened? The sell-off continues, and despite a brief pause during Wall Street trade that opened hopes of an end to this rout, it was quickly dashed as investors went back to dumping stocks. The chaos that has ensued in the last 24 hours raised myriad of questions. But the first one is inevitably this: why did that happen? In short: there’s not a clear answer. That isn’t to say that there isn’t reasoning behind the sell-off; on the contrary, there’s plenty to explain it. Rather, it’s a matter of “why now?” – an explanation that has proven elusive for market participants. From some sort of academic perspective, it’s a matter that begs to be resolved, but for those with skin in the game and money on the line, it’s secondary to the fact that this is happening, and a rapid-response has been required. Higher rates: This being so, it warrants an examination on the state of play. US equities – the shining beacon atop the dimming global financial landscape – became hobbled about a fortnight ago after a slew of US Federal Reserve speakers came-out to implore that growth was so “extra-ordinary” that interest rates may not yet be near the “neutral rate”. Not only that, the US economy could run so hot that a move in rates above the “neutral rate” may be required, to lean on a booming US economy. Bond markets responded violently to the new information – as is well known – with traders demanding higher yields on US Treasuries, sending the US Dollar higher, stretching US stock valuations in certain segments of the markets to unattractive levels, and generally denting risk appetite. Slower growth? Though such structural challenges reared their head, the initial reactions from investors were on-balance positive: the Fed needs to raise rates because the US economy is just that strong. This is a positive thing, it was rationalized: fundamentals are good, so the bull-market should continue. This idea became challenge this week for US investors, as dark clouds started to brew on the eastern horizon: China looks as though it could be slowing, and the trade war could make this worse. A world of slower Chinese growth is a world without a strong economy; and that means, for the many US corporates exposed to the slings and arrows of China’s outrageous economic fortunes, lower profits and lower returns for their shareholders. Panic-stations: With this as the very simple fundamentals, momentum in the US equity market slowed-down, probably as flow-chasers exited the market, robbing equities of their bid and beginning the cascade in prices that we’ve witnessed the last 48 hours. Frenzy has of course ensued, as investors bank profits where they can and take advantage of the gains the mighty bull-run on Wall Street has delivered. The panic has naturally spread to equity markets throughout Asia and to Europe, sparking calls that the divergence in US markets and the rest of world – that has characterized months of trade – is coming to an end: the last bastion of strength in the post-GFC, easy-money-era bull run is falling. Trend reversals and new lows: Trend lines and support levels are being broken everywhere you look. The global recovery (good since March) following February’s massive correction has ended. Chinese and Hong Kong markets have hit new lows, on some indices ones not seen since 2014, even despite very attractive valuations. Japan’s Nikkei has tumbled from 27-year highs to wallow back around the low-22,000-mark. European shares are on the precipice of breaking-levels that would open downside to near-12-month lows. And the ASX is hugging an upward trendline resistance level established in early-2016, when the global growth story was barely a twinkle in the global economy’s eye. Here, the bears have begun to circle, waiting to profit from a massive, long term trend reversal that vindicates the widely held view that markets can’t possibly prosper without central bank support. Market psychology: Here, it’s time for a moment of pause. The whirlwind of panic-selling and confusion that has stripped market participants of their rational faculties has laid the fertile soil for the described narrative to flourish. It’s not that individual traders aren’t aware of this either – the hysteria is easy to see, and more importantly see through. But when your money is on the line, and precious profits are being eroded, why hold your position when you can’t be sure that everyone else isn’t crazy? Or even more appropriately: why hold your position when you can’t be sure that everyone else isn’t thinking that you are crazy, and that they aren’t about to dump their positions in anticipation of you dumping yours in some hysterical haste? Either way, as a rational, self-interest investor, it’s best not to risk it – sell now and take profit before the herd wipes it all away. Waiting for calm: So now markets get stuck in a death spiral, and though plenty of contrarians try to pick a bottom, most generally get swept aside by the wave of selling. The weekend couldn’t come sooner for markets now because a break from the madness is needed to regain some equanimity. A focus on the fundamentals is required, to assess where true value lies in the current market milieu. Price action on Wall Street last night indicated signs that perhaps this is beginning to manifest: the session saw another close in the realms of 1-2 per cent lower, but the extent of losses vacillated throughout the day. US tech, which with its high concentration of rate-sensitive stocks, demonstrated that investors still have appetite for growth stocks, with the NASDAQ registering the smallest losses of the major US indices. Day ahead: Risk appetite won’t be whetted by what happened on Wall Street (or Europe too, after credit spreads blew out again courtesy of new animosity between Rome and Brussels) overnight. Futures markets are pointing to another ugly Asian session, characterized by some rather aggressive selling. Buying into equities anyway (no-less in riskier Asian markets) at this time would be considered especially imprudent. Safe-havens will be in vogue today: the growth-versus-risk proxy, the AUD/JPY, remains wedded to the 79.00 handled, US Treasuries have climbed, with the yield on bench mark 10 Year note falling to 3.13 per cent (perhaps supported by last night’s soft US CPI print), while the US Dollar is being punished, driving funds into gold, which has torn above the $US1220 price. Australia: SPI futures point to a 47-point drop at the open for the ASX200, with IG pricing suggesting the market should land just above support at 5810. If this proves to be so, and a close below 5860 is registered, a 2-and-a-half-year trend will come to an end. Health care stocks may see some staunching of their falls, if the activity in US tech is anything to go by; but the energy sector and materials space will likely struggle, given the drop-in oil prices to $US80.00 last night, coupled with the general dip in commodity prices. The Australian Dollar is experiencing strength, but only because of a weaker USD, with the strength of our currency possibly hinging on how well the contained slide in the Yuan can be managed by the PBOC. All in all, the day shapes up as another challenging one, as Australian investors enter the final trading session of a week, that for many, couldn’t end sooner. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  4. JasmineC

    Volatility - APAC brief 11 Oct

    Volatility is up, and risk appetite has been dulled. The VIX traded towards the 22 figure overnight, while currency safe havens such as the Yen were sought amid a somewhat remarkable sell-off across global equities during the European and North American sessions. It’s a matter of markets continuing to adjust to a world of higher interest rates and US Treasury yields – coupled with the expected panic when prices recalibrate to evolving fundamentals. A strong enough argument can be made that we are witness the beginning of the end for the US bull-market: there’s no shortage of voices out there suggesting so. It stands to reason that perhaps riskier plays into growth stocks should be replaced by more conservative investment strategies – say, by rotating into defensive, higher yield stocks. The idea holds merit, but a few days of selling on the back of a less than assured spike in global bond yields isn’t a cogent enough argument to abandon all risk-taking. North America: Wall Street has demonstrated a broad-based sell-off. Once more: investors are adjusting to changing fundamentals in the face of higher global rates. Sectors with what may be dubbed stretched valuations are struggling, unaided by the kick-up in discount rates and unattractive yields. The tech-sector, embodied by the NASDAQ, has delivered the most significant losses for the US session, down in the realm of 4 percent; but the Dow Jones and S&P isn’t far behind, down about 3.1 per cent and 2.6 per cent (give-or-take) themselves. The sectoral map across all three of these indices is painted a rich red today: traders are apparently grabbing cash here, liquidating what they can before they get lost in the herd. The end of a cycle? When markets experience the sorts of structural shifts being witnessed in the last fortnight-or-so, falling back on conventional wisdom can be illuminating. Not to say it provides the answers, but more so that historical knowledge can be drawn upon to show nuance and contrast in the haze of the present moment. What of the economic cycle here? The rationale behind traders’ behaviour might be described as a response to the ever-beating mechanics of the macro-economic process. The Fed is raising rates and growth is apparently reaching a peak, meaning that upside for capital growth may be diminishing. Turning these gains into cash and distributing profit could be the smart-money driver of equity markets, in the expectation that little more can be reaped from what has been sowed. Upside exists: While compelling, markets function at the influence of far too many distortions to rest on the belief that we are end of cycle. The Fed’s unwinding balance sheet and progressive interest rate normalization is an act without precedent: cycles have been bent and interfered with, making prices a less reliable indicator of financial market phenomena. It’s in part why a sell-off such as the one witnessed in Europe and North America overnight elicits such nervousness. Markets can’t be sure what was once true still applies. In digesting the US experience and how it relates to Fed policy, it must be counter-balanced with notion that global monetary policy is still very accommodative. Granted, this is less so than 4 or 5 years ago, but in the grand scheme of things, with Europe and Japan still in negative interest rates, not to mention a Chinese government with a stimulus bias, reason to believe markets remain well supported are ample. Bears abound: It’s intermingled with other concerns, for sure, so a bearish sentiment permeating markets is easy to understand. Mystery still reigns regarding the health of China’s economy, and the European Union and the economic zone it presides over looks inherently unsound. European markets participated in the equity market dumping, sucked into that black-hole by widespread panic selling, driving the DAX and FTSE down 2.2 per cent and 1.3 per cent respectively. Rates and bond markets de-risked slightly, however, boosted by the news that key Brexit negotiator Michel Barnier believes a Brexit deal could arrive as soon as next week. The pound has flown toward 1.32 while the EUR is sustaining itself at 1.1520, supported by a diversifying of risk across G4 currencies in response to the night’s equity rout. Asian equities: The Chinese growth story may be the biggest determinant of the Australian share-market’s fortunes, however: slow growth in China means slow growth in Australia, so the ASX200’s sell-off this month can be explained-away easily when also factoring the raucous activity in global bond markets. The technicals become interesting for the ASX200 here, especially given that SPI futures are pointing to a dumping this morning, with weekly trend-line resistance at ~5860 in risk of being breached. For investors with a preference for the Asian region, attractive valuations abound, explaining the little jump in the Hang Seng yesterday, with investors lured into an appealing P/E ratio across that index below 10:1. Similar valuations exist in Chinese shares, offering a high-risk-high-reward dynamic for investors: a strong will is a requirement before jumping into Asian markets however, because volatility will stay the norm. The Middle Kingdom: China will struggle for as long as the trade-war rages, but on balance policy markets appear well equipped to tackle the matter. Overnight it was announced that the Chinese government would include a greater number of financial institutions “systemically important” (read: too big to fail), to offset the weekend’s credit-boosting endeavour of cutting the Reserve Ratio Requirement. The slip of the off-shore Yuan to around 6.93 last night also suggests the PBOC will calmly and gradually let the currency ease to support China’s growth. Although lost in the bloodbath last night, commodities prices, down on aggregate apparently due to the tumble in oil, are displaying signs of some green shoots: industrial metals are broadly of off their lows, suggesting some signs of optimism toward Chinese growth and the region’s markets. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  5. JasmineC

    Growth v. Risk - APAC brief 10 Oct

    The growth-versus-risk paradigm shifted further in favour of the latter in the last 24 hours, as a multitude of stories compounded the bearish sentiment mounting in global markets. Though Chinese markets were more stable yesterday, an IMF report downgrading global growth forecasts for the first time since 2016 reinforced the possible growth-sapping impacts of the unfolding US-China trade war. Risks in Europe piqued again, following renewed inflammation of tensions between the Italian government and European bureaucrats, weakening the EUR/USD and pushing European bond spreads wider. While the trade war story also dented the growth story, after news broke that the US Treasury Department may be poised to officially label China a currency manipulator. ASX200: SPI futures are indicating a 4-point drop for the ASX200, following another belting of Australian shares yesterday. Futures markets have unwound the projected falls at the open for the ASX200 throughout the North American session, courtesy of an overall lukewarm but stable night’s trading on global markets. Support levels were brushed aside in local trade yesterday, with 6100 and 6060 offering little inertia, squashing the index into its eventual closing price at 6040. Downside momentum has really taken hold of the ASX now, shaping the perception that a short-term downtrend is emerging for the market. The daily-RSI reading suggests the sell-off is somewhat overcooked, but the prospect of a complete and immediate recovery of this week’s losses appears remote. Risk factors: Tuesday’s trading provided much of the necessary insight, however, into what cascading set of influences is driving the Australian share market. There are more than enough risk factors percolating through markets now to fuel bearishness on the ASX, but as always, the interest is in determining what weight each variable carries for the success and failure of the index. The global growth story is one of those, tied into fears of a Chinese economic slow-down and the effects of the trade war on financial markets. Another is the numerous risks to local and international financial stability, taking the form of underperformance from bank stocks, possible fiscal crises in Europe, and a possible blow up in emerging markets. All those stories play their part to a build-up in downside risk, but market-activity yesterday suggests that the biggest issue plaguing the market is this: the global sell-off in equities in the face of higher global interest rates. Local market drivers: The sectoral map for the ASX200 yesterday handed the clearest insight into this dynamic. For one, the bank’s stock prices pulled back after their modest recovery last week, no longer exhibiting signs of upside from higher global long-term bond yields; and the materials and energy sector also faulted, even despite a modest tick-up in oil and metal prices, and the easing of selling-pressures in Chinese equity markets. Though the truth in the ASX’s fortunes will often lie within activity in any one of these three sectors, the lion’s share of market action yesterday was generated by the heavy 4.11 per cent loss of the health care sector, catalysed by a 4.5 per cent and 5.2 per cent dumping of market darlings CSL and Cochlear, respectively. Heath care stocks: The rout in health care stocks ties back into a theme manifesting the world over: that growth stocks are coming out of vogue as global discount rates increase. Much alike the tech giants in the US, Australia’s major healthcare stocks – again, the likes of CSL and Cochlear – have carried the Australian share market this year, collectively generating a YTD return of over 21 per cent. These companies, better defined as bio-tech firms, have traded with increasingly stretched valuations, and with naturally lower yields. The spike in global rates over the past week has put pressure on valuations, as well driven investors to chase returns in safer, higher yielding assets. It’s a phenomenon playing out at a fundamental level the world-over, causing drag across equity markets and consequently an overall bearish sentiment within them. Although no reason for alarm yet, with opportunities still ample ahead of projected strong earnings growth, the combination may portend bearishness for ASX200 traders moving forward into the back end of 2018 and start of 2019. Risk-off: The parameters dictating market sentiment presently is tipping markets away from riskier assets and into safe havens. The already described activity in equity markets evidences this, but less structural and more transient and nebulous concerns are materializing in other asset classes. The Japanese Yen, for one, has attracted flows this week, falling back below the 1.13 handle last night. The stronger currency and risk-off dynamic has quashed the Nikkei’s bullishness, pulling that index down from its recent 27-year highs. Paradoxically, the AUD/USD has climbed within this context, bouncing off the bottom of the pair’s trend channel back above the 0.7100; however, after the multiyear lows registered last week, this is probably reflective of some opportunistic profit taking from short-sellers, with the more accurate growth-versus-risk currency pair, the AUD/JPY, falling below the significant 80.00 handle last night. North America: The rotation out of growth stocks is afflicting Wall Street indices, however the thrust behind this process did ease last night. The reasoning for this was the settling in US Treasury yields, which fell throughout the day, after the benchmark US 10 Year Treasury clocked new 7 highs at 3.26 per cent during the early stages of the session. The NASDAQ was subsequently allowed to arrest its 3-day tumble, closing effectively flat, while the comprehensive S&P500 dipped 0.1 per cent. The far narrower Dow Jones lost 0.2 per cent for the day and demonstrated best the unfolding rotation into defensive strategies by investors: putting aside the jump in oil prices that led the rally in the energy sector, once more the conservative consumer staples, communication and health care stocks proved the leaders of the day’s trade. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  6. JasmineC

    Blue Monday - APAC brief 09 Oct

    Markets welcomed back the Chinese from holiday and all the bad news came together at once. That’s not to say the world’s problems, at least as it applies to global markets, can be rooted in China. Frankly, it was a hapless start for the week, by any measure. The build-up of trader fears simply over flowed during yesterday’s Asian session, as China’s markets attempted to digest a whole week of news all at once. Most of these issues sit beyond Chinese borders, with the fundamental issue remaining the prospect of higher global rates. But a truth that is taking come sifting to exhume is to what extent is the activity in China a reflection of a slow-down in the Middle Kingdom’s economy. Chinese policy: That issue was raised on the back of China’s policy makers’ announcement of a cut to the Reserve Requirement Ratio for Chinese banks over the weekend. The measure reduces the capital some major banks in China need to hold in reserve – an attempt to boost credit creation within the economy. This tactic runs counter to a broader strategy of deleveraging the Chinese economy, tipping the priorities of policy makers ostensibly from one focusing-on financial stability, to one focusing instead on stimulating growth. Again, stripping back the arguably more significant story of trade-wars and higher global rates, investors seemed to interpret the latest policy intervention as a small admission: the Chinese economy is cooling, and needs a little boost. China’s fundamentals: The risk in this situation is to catastrophize: “China is heading for a hard-landing!”. While a firm grasp on the likelihood of such an outcome is difficult to ascertain, owing to the notoriously opaque nature of the Chinese economy, a catastrophic collapse in China’s economy is probably quite remote. The data (assuming it’s veracity, here) coming out of China is still rather strong: growth is set to remain around 6.5 per cent, employment is solid, and prices are stable. The worries centre around some weak trends in some supply side and consumption data, which though not dire, portends some future slack in the economy. PMI figures are the most conspicuous in this regard presently, trending down for the best part of 6 months, but cracks are also beginning to show in data-points of the likes of retail sales and industrial production. Chinese indices: The uncertainty hurled up by a possibly softer Chinese economy introduced the level of mystery to the very tangible macroeconomic risks of higher global tariffs and spiking global rates. With so much information to consume, investors hit the sell button en masse and smashed Chinese equity indices yesterday. Using the benchmark Shanghai Composite as a barometer, Chinese markets lost 3.72 per cent in value throughout yesterday’s Asian session, driving that index just above support at 2700. The bloodletting may well prove challenging to staunch here, and futures markets are pricing another – albeit less severe – day of losses. The general flight of capital is stinging the off-shore Yuan, sending the USD/CNH through support of 6.90, as the PBOC struggles to wrestle control of the currency from a market that clearly thinks it should be lower. ASX: Given this as the regional macro-economic backdrop, it’s easy to comprehend why the ASX200 gave up the ghost yesterday. SPI futures aren’t indicating a let up for our market either, indicating another dip at today’s open. Australian shares were squeezed by the numerous pressures compressing equity markets more broadly: investors are backing away from riskier assets, especially high-growth stocks, preferring safer yields in fixed income markets; while worries about tariffs and Chinese growth enervated investor sentiment regarding the future strength of the Australian economy. As such, the materials and energy sectors sank the overall ASX200, courtesy of a sell-off in commodities prices, resulting in a day where market-breadth was just over 12 percent, and the index closed right on support at 6100. Italy and the EU: Europe threw at investors its own challenges yesterday, in the form of another flare-up in tensions between the “populist” Italian government and bureaucrats in Brussels. The story revolves this time around comments made by Italian Deputy Prime Minister, Matteo Salvini, in response to criticism from the European Union about Italy’s budget deficit. In short: Salvini put his country’s woes back on the EU and its policymaking, blaming “the politics of austerity”. The fresh barbs pushed the spread on Italian government bonds and German Bunds back around 304bps, and the EUR/USD below the 1.15 handle to shed 0.3 per cent, adding to a day that was already mired in the global bond rout and equity-market sell-off. Wall Street: The North American session has closed shortly before penning this paragraph, and to the credit of US markets, the Dow Jones and S&P500 have pared the day’s early losses to finish very modestly higher. The dynamic was no doubt aided by the Columbus Day holiday, which meant US Treasury markets were out of action. Nevertheless, considering the overwhelming dour sentiment established by Asian and European markets, plus the multi-year lows registered by broader emerging markets, a more-or-less steady day for US shares is no mean feat. The gains were led by a clear rotation into defensive, dividend-yielding stocks: consumer staples and communications stocks topped the Dow Jones’ sectoral map, supported in part by another rally in financials stocks from the prospect of higher global rates. US Tech: The takeaway from the US trade is once again how big-tech performed, with the NASDAQ stripping 0.67 per cent for the day. The famous FANGs stocks registered a third straight day of losses, driven by a 1.34 per cent fall in Amazon shares, and a 1 per cent loss for Google parent-company Alphabet. The rotation out of high growth stocks – the kind that have pushed US markets to record highs this year – is apparently taking hold, as discount rates increase, and safer-yields are sought-after in the face of higher global bond yields. Although earnings growth is projected to remain strong into the immediate-future for US shares, the lack of appetite for high-growth stocks gives-off the smell of a market that is looking a trifle toppy. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  7. JasmineC

    The new week - APAC brief 08 Oct

    It’s likely global markets will sway to begin the week, in a bid to find some semblance of equanimity following a raucous week. The international bond rout will be the essential force underpinning price action, with other markets and asset classes to take cues from there. Anxieties regarding trade wars and global growth will probably become more present too, as Chinese traders return from holiday, adding a layer of uncertainty on-top of increasingly volatile fundamentals. The shaky sentiment will weigh heavily on riskier assets one must assume, boding poorly for equity markets and currencies such as the Australian Dollar. Risk from here appears skewed more-and-more to the downside, especially considering numerous geopolitical risks, in the form of US mid-term elections, Brexit negotiations, and a fresh reporting season, will surely throw-up new unknowns. ASX200: That’s the general context that the ASX200 will open within this week. The last price for SPI futures indicates that the Australian share market is poised for a 28-point drop to kick-off the week. It follows a day in which the index inched higher on Friday, despite the overall mire that swamped global equities at the back end of last week. Higher global bond yields, particularly at the back end of the curve, has supported the banks, while a catch-up rally in materials stocks from slightly higher commodity prices and another oil led climb in the energy sector constituted much of the activity within the ASX200. This confluence of variables made for a day of low breadth across the sectoral map, symptomatic of an insubstantial market, pointing to an overstretched run for the index. US Non-Farm Payrolls: The first step for local traders this morning will be to digest the impacts of Friday evening’s US Non-Farm Payrolls. The data was shaping as potentially the most significant release for the year, by way of virtue of the rout in US Treasuries last week. Upon its release, the data proved to be mixed and on-balance a trifle underwhelming in contrast to its big expectations. The unemployment rate hit a nearly 50-year low at 3.7 per cent, but the headline jobs-added figure missed forecasts considerably, printing a relatively meagre 134k versus an expectation of 185k. The centrepiece, as has been the case for some-time, was the wage growth component of the data, which came in bang-on expectations at 2.8 per cent annualized, assuaging same fears of a short-term break out in inflation. Rates and Bonds: Reactions in markets were delayed, but throughout the US session, came to be interpreted in a bullish-hue. The prevailing sentiment evolved into this: the data does nothing to stand in the way of what a slew of US Fed speakers concertedly impressed upon markets last week: US interest rates need to head higher to manage booming economic growth. Sensibly it seems, given that the labour-market is operating at a rate not witnesses since US military employment was 4 times higher than it is today. The sell-off in US Treasuries regained its hold, as traders increased their bets on higher US interest rates, pushing the yield on 10 Year US Treasuries to a new 7 year high of 3.23 per cent. US Shares: Wall Street equity traders demonstrated their displeasure toward the prospect of higher global rates, selling-down on Friday night (AEST) to push US stocks to a 3-week low. The NASDAQ led the dip, with investors pulling funds out of low yielding and risky growth stocks in the tech sector, ultimately pulling the comprehensive S&P500 down 0.55 per cent. The pop in global bond yields sets-up an interesting dynamic for US equity markets leading into the back end of the year, with the strength of very strong fundamentals colliding with the weight of higher discount rates, coupled with a series of global and US-centric political risks, pulling US indices in opposing directions. It establishes a fascinating earnings season in a few weeks’ time, during a period what is traditionally the most fruitful for US stock markets. Currencies: Price action in currency markets in response to the Non-Farm Payroll release was subdued. The risk-off-value of the US Dollar diminished, leading to a pop in the other major G4 currencies. The pound experienced the strongest bid, climbing above 1.31 once more, supported by reports that a Brexit deal is realistic and imminent. Despite the generally weaker greenback, the AUD is still losing friends, registering a low over the weekend not seen from the Aussie Dollar since February 2016. The local unit awaits its date with the 0.7000 handle, as bond traders move en masse to price in higher US interest, threatening to drive the spread on the interest rate sensitive 2 Year US Treasury Note and the Australian 2 Year Commonwealth Government Bond further above 90 basis points. China: The fascinating story to start this week is what effect the return of Chinese market participants will have on Australian and global markets. Investors probably benefited from China’s absence last week, placing trade war concerns and fears about slower Chinese growth to the side, temporarily. The off-shore Yuan depreciated to the key 6.90 resistance level without the influence of the PBOC, probably bolstering the USD across the board. The activity within Chinese markets will be made more interesting by the intervention announced by the country’s policy makers over the weekend, who have cut once more the reserve ratio required for some banks in response to softer credit and growth conditions. Watch for activity in copper prices as the barometer of how successful China’s economic boffins are at improving perceptions of Chinese growth, with the bears taking hold of that metal late last week is response to a weaker global growth outlook. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  8. JasmineC

    Treasury sell-off - APAC brief 04 Oct

    Economic data flow has been relatively light overnight, but activity on financial markets is especially rife. It’s begun with the bond market – not in Europe this time, but in the booming United States. There doesn’t appear to be a discernible flashpoint that’s sparked this, but nevertheless and for whatever reason, bond traders have hit the sell button on US Treasuries. The phenomenon can be witnessed across the curve, with US 2 Year Treasury yields climbing to levels not seen since 2008 at 2.86 per cent, the benchmark US 10 Year Treasury yield hitting levels not seen since 2011 at 3.15 percent, and US 30 Year Treasury Yields clocking-in levels not seen since 2014 at 3.31 per cent. As one can safely assume, the DXY has rallied on the developments, pushing to a 6-week high just shy of 95.80. It’s growth, not inflation: An explanation for the sudden frenzy in fixed income markets is being foraged for. The concern in these situations is that such a move could indicate strife: something tied back to fears uncontrollable inflation, or a reflection of a higher likelihood of US fiscal deterioration. To the relief of market participants however, the consensus regarding the moves overnight is an optimistic one: traders are buying into the Fed’s “growth, growth, growth” view expounded over the last week, and are as such pricing in the prospect of higher US rates. Although myriad of risks now emerges for other asset classes as a consequence to the (apparently) inexorable rise in yields, the underlying reasons should be cause for a calm and collected cheer. Wall Street: How the rally in bond yields, provided it continues, manifests in US equity markets will become the centre of concern, one would imagine, in coming days and weeks. US indices faded into the close last night as the Treasury sell-off took hold, with the benchmark S&P500 closing only a fraction higher for the day. Both the Dow Jones and NASDAQ put-in a better performance for the session, posting gains of 0.2 per cent and 0.3 per cent respectively – the former registering new all-time highs in the process – but pulled-away notably from intraday highs at the back end of the trading day. Interest rate sensitive and high growth sectors underscored the day’s volatility, as financial stocks climbed along with information technology and industrial stocks; while real estate and consumer sectors suffered under the assumption higher US rates will weigh on property markets and consumption. The Fed and the stock-market: An implied maxim of the US Federal Reserve that elegantly describes last night’s trading dynamic (the articulation of which is often attributed to Ex-Fed-Head Alan Greenspan) is that the role of Fed is to “take away the punchbowl when the party is getting started”. It was this abstraction that was philosophically behind this year’s stock market correction in February and caused investors to flee from equity assets. Markets appear more circumspect at the moment, galvanized by a booming US economy, and higher corporate profits buttressed by US President Trump’s stimulatory tax cuts. Consensus is still that the times won’t immediately change for the US stock market, with valuations forecast to tighten as earnings keep improving. Even still, as the US equity bull market charges forward, an anxiety that will hover over markets will be whether the Fed’s determination to “normalize” interest rates will sober investors’ euphoria. ASX: The lead set by the heavy activity on North American markets overnight has SPI futures indicating a 14-point jump for the ASX200 at market open. Australian shares managed to recover territory yesterday, led by a catch up by materials stocks to the global recovery in commodities prices, coupled with a more general recalibration across the index following Tuesday’s bank led sell-off. The fortunes of the financial sector will be of interest today given the tick-up in global bond yields: the circumstances should lead to a favourable view of future bank profitability, but with the Royal Commission still overhanging the industry, perhaps this will be ignored. The ASX200 closed the day at 6146 yesterday, bouncing off support at 6120: previous support at 6160 may prove formidable resistance here and should be watched closely by technical traders. Oil rallies, EUR stable: There were a variety of other stories occupying traders last night that are worth touching on briefly. US Crude Inventory data was released, showing a surprise increase in oil stock piles. Despite this, the price of oil maintained its upward momentum, driven by the belief that blips in inventory data won’t change the structural problems caused by low production and undersupply. The other unfolding story that is moving markets is the Italian fiscal battle, currently being waged between bureaucrats in Rome and Brussels. The tensions and fears cooled in the last 24 hours, following news that the Italian government had agreed to reduce its budget deficit to 2.0 per cent by 2021. The risks here are ongoing, but for the time being the EUR has settled as the spread between Italian government bonds and German Bunds have narrowed. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  9. JasmineC

    Macro-drivers - APAC brief 01 Oct

    Macro-drivers: Global markets endured a night of mixed trading, sandwiched between several risk factors, and the waning optimism of the USMCA. US indices were generally lower, although the large-cap Dow Jones managed to register new all-time highs. European markets were held back by grief surrounding Italian fiscal sustainability, coupled with lingering concerns about the outcome of Brexit. The general sense of risk aversion led to an appreciating USD and climb in US Treasuries, pushing yields on the benchmark 10 Year Treasury note to 3.05 per cent. Oil cooled its run somewhat as commodity traders took a breather, as WTI and Brent Crude clocked gains above $US75.00 and $US85.00 per barrel, respectively. The overnight session establishes an uninspiring lead for the Asian markets in general, auguring a mixed day ahead. ASX: SPI futures are pointing to a slight uplift in the ASX200 this morning, backing up a day which saw the Australian share market shed 0.75 per cent. There were really no winners on the day, with the only sector coming-out in the green being the energy sector. The financials couldn’t halt their sell-off, declining another 1.12 per cent yesterday, while the losses were compounded by a reversal in the price of CSL, which led the health care sector 1.36 per cent lower on the day. The breadth of gainers for the session were low again at 23.5 per cent, and volume was robust, indicating the (on balance) bearishness of this market. Momentum hasn’t shifted dramatically to the downside yet, but yesterday’s break of support at 6160, and close just above support at 6120, suggests some sluggish times ahead for Aussie shares. RBA: The local session yesterday was bereft of truly impactful news, but of course attention was duly allocated to the afternoon’s meeting of the RBA. No surprises were what was expected, and no surprises is what traders got: there was a tip of the hat to the accuracy of the central bank’s growth forecasts of +3 per cent, a reiteration of only a gradual return of full employment and at-target inflation, and a very soft warning of how low wage growth and high private debt levels may hinder household consumption. The reaction in interest rate markets was dull, but slightly to the downside: bets of a hike from the RBA got pushed back to March 2020 as opposed to February 2020, according the ASX 30 Day Cash Futures markets. Aussie Dollar: The Australian Dollar came-off shortly after the meeting however, slipping from about 0.7230 to plunge beneath support at 0.7200. To the naked eye it would appear a reaction to what was (perhaps) a dovish RBA, but close inspection suggests the impetus lay somewhere else. Risk currencies sold-off in tandem at around 3.00PM (AEST), as news broke out of Europe about Euro-policy makers concerns about Italian fiscal policy and the possibility of an Italian default. The spread on Italian and German 10 Year bonds widened once more (to currently trade around 300 basis points) sending the EUR to 1.1540 as funds flowed into the safe-haven USD. Naturally, the AUD suffered as a result, to presently just shy of 0.7190. Italy and Europe: The Italian fiscal situation in looming as a major risk for the European economy. It is not getting quite as much local press as it deserves, though this is in a sense justifiable given the preoccupation with the grave implications of the US-China trade war. The crux of the issue in Europe relates to the ruling “populist” government in Italy, and its reluctance (or even refusal) to comply strictly with the Eurozone’s rules regarding sovereign budget deficits. The recent Italian budget has tested European bureaucrats’ patience, leading to a rebuke yesterday from European Commission President Jean-Claude Juncker, igniting a counter-response by key Italian “League” politician Claudio Borghi, who stated Italy could solve its problems if it controlled its own currency. The hostility swept through European bond markets, spurred a sell-off in equities and pushed the EUR well into the 1.15 handle. Greenback: The US Dollar was the inevitable beneficiary of Europe’s woes, climbing to a 6-week high, in DXY terms, to 95.50. The trading activity is a reminder of the two-pronged benefit of long USD positions at-the-moment: the US Fed’s determination to hike interest rates is attracting yield chasers, supporting the greenback, while the litany of global risks is pushing traders intermittently into safe havens, also supporting the greenback. The upward trend has cooled for the USD of late, leading to calls that the currency could be creeping towards a top. But with US Fed Chairperson overnight talking up the “extra-ordinary” times experienced by the US economy, as well as talking down the prospect of out of control inflation caused by tight labour markets and increases in global tariffs, the underlying bullish-trade remains well justified for the greenback. US Indices: A question raised by such bullishness from market participants and policy makers alike is, how much further can the US equity bull run last? It’s foolish to ever call tops on any market, especially one that is apparently founded on such strong fundamentals. The benchmark S&P500 and NASDAQ traded lower overnight, though both indices sit within reach of new all-time highs. The far narrower Dow Jones index, however, registered a new intraday high during the US session, climbing 0.46 per cent to close at 26773.94. A word of warning must be disclaimed with the Dow Jones as relatively high as it: though one wouldn’t want to call a marked sell-off, rallies for the Dow Jones that extend this far above the more comprehensive S&P500 often result in a pull back for the Dow Jones, as traders buy into the index in an attempt to enter-and-exit the market on the basis of rosy-sentiment. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  10. JasmineC

    Relief-rallies - APAC brief 02 Oct

    Deal done: Hopes were whetted during overnight trade from the news that the US, Mexico and Canada had agreed to a revised “NAFTA” agreement. To be (re)named USMCA – the US-Mexico-Canada-Agreement, a clear declaration of the Trumpian neo-Nationalist, “America First” agenda – the trade agreement reconfigures the North American trade consensus, with a skew towards US economic interests. It was apparently the Canadian’s who finally caved in to political and economic pressure on the trade pact, backing down on dairy tariffs and restrictions on US-automotive imports, judging that a deal with the White House was better than no-deal with the White House. Without stripping-back the surface to dig around the details, markets responded favourably to the news – a total sentiment play – with the prevailing view being that this sets the foundations and framework for new deals with the US’s other trade adversaries. Relief-rallies: Because of this view, reactions to the news were asymmetrical – not leading to a broad-based lift in risk appetite, but a relief rally in markets within geographies targeted by US President Trump’s protectionist ire. The big uplift was in Japanese markets during the Asian session, owing mostly to the fact it was one of the few markets open yesterday in the region: the Nikkei jumped to 27-year highs, to float about the 24,300-mark, a level futures markets are indicating will be exceeded once more today. The embattled DAX lifted during the European session to ram solid resistance against that index’s downward trendline, while the industrial-laden Dow Jones led US indices higher, to trade (at the day’s highs) only 30 points away from fresh record levels. Risk-currencies: Proving that it wasn’t a sweeping relief rally on financial markets overnight, certain risk assets and global growth proxies behaved apathetically to the USMCA announcement. Our own Aussie Dollar was one, barely blinking as the news hit the wires, spending the day’s trading in a tight band between 0.7200 and 0.7225. The price-action on the USD/CNH provided the best insight into market perceptions regarding how this will impact the US-China trade war, floating further towards the 6.90, conveying that friendliness between North American allies won’t translate to a reduction of animus between the US and China. Naturally, it was the USD and CAD that experienced the solid bidding for the day, with the greenback appreciating against most G10 currencies, with the CAD being the obvious exception to this, which rallied 0.9 per cent to dive back into the 1.27 handle. ASX: The narrow-effects of overnight’s relief rally isn’t expected to manifest a great-deal in the ASX200 today. SPI futures are pointing to an 8-point advance at the open this morning, backing-on from a day in which the benchmark Aussie index stripped just shy of 0.6 per cent. The index found its comfort zone, right within its recent trend channel and just below its 20-day and 100-day EMAs. Volumes were light because of the public holidays in China, Hong Kong and parts of Australia, but not absurdly so. Sellers were drawn into the market in haste, primarily driven by fear about likely weakness in the market’s besieged financial sector. The dynamic dragged the rest of the market lower for the day, keeping the breadth of gaining stocks to below 30 per cent. Banks: The ASX200 will struggle to reclaim fresh decade long highs with the banks facing the sell-off that they are. While not performing tremendously well by many measures throughout the year, it's been with the support of sporadic rallies in the financial sector that has provided the ASX the basis to form concerted runs higher. Yesterday's sell-off of around 1.50 per cent across the sector portends a challenging final calendar-quarter for the banks and therefore the Australian share market, as investors approach the belief that the policy outcomes of the Financial Services Royal Commission will result in profit-crimping regulatory changes. It's a phenomenon that many-a punter will feel appropriate and necessary, but the likely crack down on the banks will likely hurt shareholders, especially while the exact policy recommendations remain unclear. RBA today: The day's trade today will be highlighted by the month's RBA monetary policy meeting, out of which the central bank is unanimously tipped to keep rates on hold. The accompanying statement is where the interest will lie, with the focus once more on the outlook for Australian households – particularly considering the release of yesterday's CoreLogic housing data, which revealed Australian property prices continued to fall last month. Rates markets nor the currency are likely to shift much on the news coming out of Martin Place at 2.30PM, but a degree of curiosity (if nothing else) will be directed to the assessment of wage growth, inflation and consumption, particularly ahead of Thursday's domestic retail sales data print. Other news: Summating the stories rotating at the periphery of financial markets in the last 24 hours: PMI figures threw-up mixed results overnight: UK figures demonstrated above forecast numbers, while European figures were generally at expectation and US print was slightly below. The data provided little insight into the fundamental effects of the trade-war on the supply side, and traders promptly moved on from these release consequently. European bond markets are still a point of concern, selling-off amid fears of Italy’s deteriorating fiscal position, coupled with worries about the effects of the ECB’s Quantitative Tightening program. The EUR/USD is out of vogue subsequently, plummeting now into the 1.15 handle, after touching highs above 1.18 just last week. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  11. JasmineC

    ASX technicals - APAC brief 01 Oct

    ASX: SPI futures are indicating a 23-point drop at the open for the ASX200 this morning, effectively wiping Friday's solid gains. It comes as no surprise, really, with the lion's share of activity centring around the embattled financial sector. Bank stocks underpinned the rally on the ASX on Friday, led by CBA, in signs that the market believed the sector's recent trend lower was overdone. It may be a case of jumping the gun for traders on that one, as sentiment appears sour once more following the weekend's release of the Financial Services Royal Commission interim report. The materials and energy sector did its bit on Friday to carry the ASX higher, courtesy of a broad-based, though modest, uptick in commodity prices; while the health care sector continued to erode its market leading YTD gains, led by a near 2 per cent fall in the CSL shares, creating drag on the overall index. ASX technicals: The price action on the ASX200 was much livelier on Friday as compared to previous days last week, perhaps a sign of increased bullishness following days of anxiety leading into the Fed. An overarching theme is lacking for the ASX now, leading to a mixed sentiment across different sections of the market. Volume was high during Friday's session, especially as the index toyed with the 6230-mark, an important level of support/resistance in recent months. Considerable profit taking emerged at that level, pushing the market well in line with its recent (more-or-less sideways) trend. The pattern appears set to continue today, in the absence of a fundamental impetus or a strong external lead. China update: The strong possibility of thin liquidity may hinder the market today, and perhaps the rest of the week, thanks to the week-long Golden Week public holiday in China. The relationship has diminished somewhat of late, but Australian markets have taken the lead of its Chinese counterparts in recent months, as fears around China's economic activity feed through to Australia. Despite not being out of the woods yet, signs are looking more promising in Chinese equity indices now, which have managed to stick fat to key technical support levels in the past week. The interesting story for those invested in Chinese assets this week will be how the USD/CNH fares with Chinese traders out of action, with the Yuan looking vulnerable to the downside towards the very important level of 6.90, following the release of weaker Caixin PMI figures over the weekend. PMI data: Speaking of PMI data, one of the significant themes this week will be the release of a spate of PMI figures across several geographies. As a great leading indicator of economic strength, particularly considering the escalating trade war, PMI numbers have softened in recent months, presumably because of tighter trade conditions. The poor Chinese PMI print sets up the release of corresponding figures in Japan, the UK, and the US today, with traders of the industrial laden Dow Jones, Nikkei and DAX surely paying attention. Given a leitmotif in markets last week was the Fed's optimistic view on global growth into the next 12 months, the data dump of global PMI data provides the first opportunity to test this proposition, and subsequently form a position on this state of markets leading into the final calendar-quarter for the year. US indices: Wall Street (for one) will be entering into a curious and frenetic period as the new month rolls around, as traders prepare for what is typically the hottest period for US equity markets. The results for North American equities were lukewarm on Friday, with major US indices holding flat for the day. The so-so performance for US shares throughout last week was still enough to ensure the strongest quarter for US equities in 5 years and place those markets well in touch of all-time highs. The element of the present trade dynamic that may make-or-break the market this quarter is how it weathers upcoming US mid-terms: US shares typically stall in the month leading into such an event, notwithstanding that this round of elections appears a vote on the confidence, support and legitimacy of US President Trump. Europe and the DAX: European markets look to remain stuck in the middle of several local and international themes. Concerns lingered over the weekend regarding Italian fiscal policy, along with ongoing fears about a no-deal Brexit and the effects the US-China trade war will have on Europe’s fledgling economic recovery. The DAX has demonstrated the sentiment-sapping effects of these confluence of factors, remaining trapped in a downtrend since mid-June, even despite rallies higher in indices with comparable trading behaviour, like the Nikkei. The downward trendline currently at 12,430 will be a formidable barrier for traders, with a solid hold above support at 12,100 required to set the foundations of a swing in momentum and a trend reversal in the near-term. Oil: A status check of activity in the oil market should be undertaken to start the new week. The price of the black stuff continues to rise, on the back of greater concerns around production and supply on global markets. The US sanctions on Iran seem to be more impactful than first believed, exacerbated by the view that OPEC+ won’t be bullied nor cajoled by US President Trump to fill the gap in supply. The US President reportedly reached out personally to Saudi Arabia’s King Salman on the weekend to discuss the matter, highlighting the risks higher prices will have on global growth and market stability. No firm outcome was reported out of the interaction, as some more bullish commentators grow louder in their calls that no change to the present trade dynamic will see oil fly to $100USD in Brent Crude terms. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  12. The overarching narrative in global markets is transforming from one preoccupied with the trade war, to one focused on Thursday morning’s (AEST) meeting of the US Federal Reserve. As far as developments in the trade war go, in a week bereft other major stories, traders are demonstrating tentative signs of ease on the subject. Markets are strapping themselves in for the long haul, and a begrudging acceptance that this thing will take time to play out is the prevailing mentality. With that in mind, and with only a laugh-worthy speech from US President Trump at the UN overnight to seriously fill the macro news void, the dominating theme is one of preparation for the US Fed meeting and a possible new world of gradually higher interest rates. That’s not to say that other news isn’t coming to the fore and causing volatility in pockets of financial markets, but for market-fundamentalists, everything begins with what the Fed will do with US rates. Rates and Bonds: Because of this, it has been in fixed income markets that any remarkable price action occurred during the North American session. Far from it was there a great deal of volatility, especially in terms of flow on effects to equity indices – what with the Dow Jones and S&P500 down 0.2 per cent and 0.1 per cent respectively and the NASDAQ up by 0.2 per cent. Rather, the structural shifts in markets and the subsequent revision of trader’s collective view on global interest rates continued to gradually play out, led by the belief that tomorrow morning we will see a hawkish Fed. The dynamic led to benchmark US 10 Year Treasuries teasing 7-year highs near 3.13 per cent, as interest rate traders firmed their bets that tonight’s Fed forecasts will imply 2 more hikes this year and at least another 1-and-a-half in 2019. Europe: European markets during their earlier trading session were swept-up in the same theme, though it must be remarked that European equities performed quite well. European bonds drifted in the slip stream of falling US Treasuries, with the yield on 10 Year Gilts approaching year-to-date highs at 1.63, and the yield on 10 Year German Bunds ticking up to 0.54 per cent. Equities performed respectably, with the FTSE adding 0.66 per cent for the day and the Euro Stoxx 50 climbing 0.27 per cent. The continent’s equity indices are generally still down for the month, but a recent lift in risk appetite courtesy of firmer certainty in Chinese and emerging markets has supported European shares. This greater degree of confidence has underpinned strength in the EUR, which made another play above 1.18 overnight, as calls grow louder that that currency has turned a corner and is due for a sustained run higher. China: Chinese markets traded as expected yesterday: indices sold down. But perhaps to the relief of many, the outcome wasn't as severe as was feared. The fortunes of Chinese indices have hinged on the judgement of what capacity Chinese policy makers have in supporting their markets, given the likely drag tariffs will have on the export focused economy. China's equity markets are some way from being out of the woods, especially because this trade war looks poised to last for the rest of this year, at a minimum. Despite this, Chinese large cap stocks are presenting low valuations, and by some measures last week's equity rally broke the market's existing down trend. Yes, traders are still selling rallies at a well-defined point in Chinese indices, but perhaps this pattern reflects an emerging, stable range trade that these markets can settle within, before making a break higher once positive sentiment turns at some point in the medium term. ASX: The foundations laid by these stories has SPI Futures pointing to a slim 4-point jump at the open for the ASX200, following a day of ultimately flat trading for Australian shares. It wouldn’t be too bold too suggest that overall price action on the Aussie market was dull yesterday. Similar forces that have driven the trading-tides on the market recently drove the ASX again yesterday: surging oil prices boosted energy stocks, while marginally greater optimism regarding global growth helped the materials space extend its weekly gain to over 4 per cent. IG data has the market opening at 6195 this morning, right at a notable selling point for traders of late -- and just below the ASX200’s 100-day EMA, which for several weeks has proven the key marker of resistance for the index. Japan: There was also lively activity in the region’s other powerhouse financial centre during the Asian session: Japan’s markets posted another bullish day, again shrugging off the various problems weighing down its regional neighbours. The improvement in global risk appetite manifested in the Yen, as that currency renewed its battle with formidable resistance at 1.1300. The weaker currency combined with a (typically) dovish Bank of Japan minutes conspired to push the Nikkei higher, which stuck fat around the 28,000 level. Though it always takes some gall to trade near new highs, particularly considering Japanese shares are underpinned by improving fundamentals, shorting the Nikkei here may become a popular view, with index’s recent run deviating someway from previous trend line support Commodity wrap: A brief mid-week commodity wrap may be appropriate here, in light of the fact economic data and news flow is relatively light. Oil is holding the commodity complex together for the best part, demonstrating signs that a base above $80.00USD and $US72.00 per barrel in Brent Crude and WTI terms respectively is emerging. The price of bellwether Copper is down on the week on fears of slower Chinese growth but remains significantly about the month’s $US5800 lows. Gold prices have been relatively unresponsive to the USD’s recent weak spell, conveying a steady balance of buyers and sellers within the yellow metal’s trading range between $US1195 and $US1207. Finally, iron ore prices are also down on the week after that metal bumped its head on resistance last week, to presently trade in Dalian terms around the 500-mark. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  13. JasmineC

    Trade War - APAC brief 25 Sep

    Trade War: Markets were made to curb their enthusiasm overnight. Trade war realities bit again and the relief rally that had defined last week’s trade dissipated. It’s not a terrible cause for alarm yet, but it highlights how difficult to predict the impact on global trade disruption happens to be. It’s a debate that challenges orthodoxy, especially given that markets have done all they can to shrug off the potential consequences new-protectionism will have on global growth. Inefficiencies abound in such a system, one must assume, but whether this leads to a rapid slowdown in global economic activity, the answer remains challenging to ascertain. The heightened political tensions and the subsequent (and intermittent) sap on investor sentiment will be a constant, but to what extent this flows into fundamental matters of global inflation and interest rates, earnings growth within equity markets, and appetite for commodities is still unclear. Asia: Far be it to speculate on the matter, the fact is traders took the weekend’s trade war escalation seriously. A lack of volume during the Asian session courtesy of well-timed public holiday’s in Japan and China blanketed the issue, meaning a solid read on how markets currently judge the trade war will rely on today’s trade. But nevertheless, global equities pulled back as a result of the news, with the industrials space hit the hardest by fears of slower global growth. During Asian trade, the Hang Seng was treated as the canary in the coalmine, what with its close proximity and ties to Chinese markets. The results weren’t great, as Hong Kong shares shed 1.32%, setting up a day for European and North American markets that began on the back foot. Overnight: Futures markets had the overnight session poised for losses, and as North America winds up for the day, it’s what traders have (generally) received. There was a lot of noise pushing indices (in particular) around overnight, over and above the very core concerns relating to the US-China trade war. US politics was one of the main wails in the cacophony, after it was reported that US Deputy General Rod Rosenstein will resign from his job. The news jolted US investors, but the losses associated with that story were reclaimed throughout the day. Of the major US indices, a tech bounce helped the NASDAQ finish the day in the green, but overall the session was one characterized by an attitude of wait and see, with US markets not selling off anywhere near enough to suggest the run of record highs is over yet. US Bonds: The fact risk appetite hasn’t truly been wiped, but has more been put on ice, manifested in bonds markets. This week is being defined by a push-and-pull between the ever-present trade war story, and the positioning leading into Thursday morning’s (AEST) meeting of the US Federal Reserve. A world of higher interest rates is being priced into markets at the moment, with US 10 Year Treasuries ticking up to 3.09 per cent again last night. Even more remarkably, the US 2 Year Note pushed to 2.81 per cent – noteworthy considering that only a month ago the 10-year was yielding the exact same – as traders apparently endorse the Fed’s view for future interest rates. Notwithstanding US yields however, the US Dollar has dipped (very slightly) again to start the week, as did the Yen, as traders spread themselves more evenly across the G4 currencies. Europe: The reason for this diversifying across the major safe haven currencies is probably fourfold: one, it pays to spread risk around in the lead-up to a Fed meeting; two, though the trade-war has markets nervous, we aren’t in a risk-off environment yet; three, a new Brexit referendum on the Brexit deal was floated last night; and four, ECB President Mario Draghi delivered a very hawkish speech overnight. Regarding the final point, in a testimony to European bureaucrats in Brussels, ECB President Draghi pressed his view that underlying inflation in the Eurozone would soon pick-up. The commentary led to a jump in European sovereign bond yields and a challenge of the EUR/USD above 1.18. The price action was reasonably short-lived, with both of those asset classes recalibrating after a period. But the comments prove that markets are priming for a (relatively) higher interest rate world – ahead of a day that will welcome Bank of Japan monetary policy minutes and a speech from BOJ Governor Haruhiko Kuroda. ASX: The ASX200 will open trade today with these various events as context, establishing a SPI futures market that has the market opening down 8 points. Trade yesterday was supported by the fact that regional concerns were left to simmer by virtue of China and Japan’s public holiday. Volume was very light, and while diminished risk appetite saw the AUD/USD pull back from resistance around 0.7300 to about 0.7250 at time of writing, the ASX200 traded well in line with established patterns. It’s a sort of malaise plaguing Australian shares that is keeping things subdued: the ASX is trading on macro themes and second-tier stories, revealing a reluctance by traders to push this market too far beyond 6200. It was a pick-up in energy stocks because of higher oil prices, combined with a lift in the telco-space following news the TPG-Vodafone merger is good to go, that kept the ASX200’s losses to a modest 0.1 per cent. Oil: On oil, the price of Brent Crude and WTI ticked higher overnight, as commodity traders buy into the view that a shortfall in supply won’t be hastily addressed by key oil producing nations. Tweet-storm or no-Tweet-storm, US President Trump’s demands for lower oil prices have gone unheeded, creating the perception that OPEC+ won’t bend to the will of the US President. The price of Brent Crude shot over $US80.00 a barrel last night, while WTI leapt over $US72.00, leading to calls that the price of the black-stuff (in Brent Crude terms) could shoot to $US100 per barrel. That call is surely premature, and it is doubtful that OPEC+ would hold its nerve in the face of US scrutiny long enough to see this occur. But a play into the mid-$80 isn’t off the cards, with some short-term key levels to watch at $81.67 and $US83.75. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  14. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 25 Sep 2018. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral adjustment on your account. Special Divs are highlighted in orange. Special dividends You can see the special dividends listed below. Unfortunately we do not have granular insight on the effect on the index for the index in question, however the below maybe helpful for some. Please note the dates below are the stock adjustments in the underlying individual instrument, whilst the index div adjustments are taken out the day before on the IG platform at the cash close. Index Bloomberg Code Effective Date Summary Dividend Amount UKX MRW LN 27/09/2018 Special Div 2 UKX HL/LN 27/09/2018 Special Div 7.8 NKY 1803 JP 26/09/2018 Special Div 600 HIS 1109 HK 24/09/2018 Special Div 13 AEX RAND NA 24/09/2018 Special Div 69 RTY PCH US 26/09/2018 Special Div 354 RTY KRNY US 02/10/2018 Special Div 16 How do dividend adjustments work? As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is effected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  15. JasmineC

    Tensions rising - APAC brief 24 Sep

    Geopolitics is already shaping-up as the major driver of financial markets this week. Data is rather light, with the US Federal Reserve’s meeting on Thursday morning (AEST) the centrepiece of an economic calendar otherwise filled with a handful of central-bank-head speeches and a meeting of the RBNZ. Hence, traders will find themselves sucked into a vacuum that can only be filled by noise surround the global economy’s biggest contemporary international-political hot-points. The break-down in talks between the US and China was once again the most significant of these, but a shift in sentiment will also be underlined by increasingly frosty negotiations between the UK and Europe, along with tensions between the US and oil producing countries. The core matter for will be how these clear risk-off factors conspire with the US Federal Reserve’s meeting to impact traders, on the back of a week that was defined by a tangible relief-rally. China cancels talks: The Chinese formally cancelled trade talks with the US on Saturday afternoon. It was what markets had feared this time last week, and true to their word, China kept to its line that it would not negotiate with the US while under duress. Frankly, how markets react to this news will be curious today, given that global markets shrugged off-last week’s developments to jump into riskier-assets, pushing US indices to all-time highs. Will this escalation in the trade-war be taken in stride by markets, or does this amount to the flashpoint that traders have been long fearing? The truth – as always – will probably sit somewhere between these two poles, but what looks assured now is that this trade-war is a battle of attrition: China will not have the long-term vision for their country disrupted; while US President Trump will not stop until he can achieve what he considers victory. Brexit backwards step: Global geopolitical problems weren’t contained to just Asian over the weekend. In a noteworthy reversal of fortunes, Brexit negotiations deteriorated further, after UK Prime Minister Therese May delivered a hostile public address rebuking the EU’s treatment of her and her country at the latest summit in Salzburg. Markets didn’t like the UK Prime Minister’s approach, hitting the sell button on the Pound, sending that currency from a multi-week high around 1.33 before the news, back within the 1.30 handle (at time of writing). The greater hostility between the UK and EUR raised once more the spectre of a Brexit no-deal, which looks increasingly likely as the October/November deadline looms. Watch for activity in the EUR/USD this week, particularly considering the scheduled speech of ECB Mario Draghi tonight, for hints that a no-deal outcome is being priced into markets, as that pair shrugs off the weekend’s news to challenge three-month highs at about 1.18. Trump, Oil and OPEC: The politics of oil rounded off the weekend’s tripartite of geopolitical troubles. In response to a US President Trump Twitter-tirade last week regarding a spike in oil prices, OPEC+ defied the US President calls to boost oil production to lower oil prices, stating that the organisation was currently doing enough to meet demand. The commentary opens-up a possible push higher in oil prices above $US80 per barrel (in Brent Crude terms) – a mark that has been consistently threatened in the past month. That price point still appears the comfortable level for Brent Crude despite US President Trump’s protestations, amounting to the mid-point between its multi-year high and low prices. However, some degree of overshooting looks possible in the short term, with $US83.75 jumping out as the next significant technical level. ASX: SPI futures are indicating a 23-point drop at the open for the ASX200 against this backdrop, following on from a week where Australian equities showed tentative signs of strength, but appeared capped to the upside in the short-term. The pattern of higher lows continued to end last week’s trade, with resistance around 6190/6200 for the ASX200 holding firm to create an ever-tightening wedge pattern for the index. Though a sign of reluctance from traders to push the market higher, the trade dynamic does suggest a pent-up bullishness that may provide a pop to the upside provided the right circumstances. It will be a matter today -- and for the rest of the week – of whether such activity can occur in an environment of heightened geopolitical risks. Intuition says no, but too often have we seen the counter-intuitive play out in this market. Australian Dollar: The benefit for Australian traders is that we may not have to look any further than our own currency to get a gauge on this. The AUD/USD spiked higher last week, spurred by the greater risk appetite brought about by (at least the illusion) of greater certainty in financial markets. The local unit launched off support around ~0.7150, to trade towards the very top of its well-defined trend channel at (at the time) around 0.7300. It would take something remarkable to push the AUD above this trend channel this week, particularly considering the economic fundamentals underpinning the market. A certain amount of profit taking should be expected at these levels too, especially given the conspicuousness of the AUD/USD’s trend. The interest will be consequently in how well the currency holds itself at these levels: it will be the best measure of trader perceptions regarding the latest escalation in the trade war. Wall Street: The fortunes of Wall Street indices will be worth assessing in the next 24 hours as a result of the heightened trade war tensions. The industrial heavy Dow Jones traded in line with the strong activity in the DAX and Nikkei on Friday, to close trade at new all-time highs at 26,743, while a sell-off in tech shares contributed to a fall in the NASDAQ and S&P500 of 0.51% per cent and 0.04% respectively. The extent of China’s hostility, at least according to the perception of traders, will be revealed by activity in the major tech stocks, which have come under pressure in recent weeks due to fears that China may target tech-company’s supply chains. Furthermore, it may be in this sentiment that dictates whether US stocks can hit new all-time highs in the week ahead: growth in US tech stocks have been the core factor behind Wall Street’s trend higher, so flatness in the sector could see the benchmark S&P500 recede back within its firmly established trend channel. Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
×