Risk markets remain quite mixed overnight as European shares fell while Wall Street eked out a small lift as the USD continued its pullback in the wake of the latest ISM Manufacturing survey which came in weaker than expected. Asian stocks are likely to open flat or slightly down as a result with all eyes on today’s Australian GDP print to likely push the Aussie dollar lower as it struggles even under a weak USD at the 66 cent level.
10 year Treasury yields fell again and lost another 7 points to just above the 4.2% level while oil prices suffered further as well with Brent crude finished just above the $77USD per barrel level. Gold was unable to rebound on the weak USD, remaining stuck at the $2330USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets held on to their positive gains going into the close with the Shanghai Composite up 0.4% while the Hang Seng Index was doing slightly better, but only managed a 0.2% lift higher to close at 18444 points.
The Hang Seng Index daily chart was starting to look more optimistic with price action bunching up at the 16000 point level before breaking out in the previous session as it tried to make a run for the end of 2023 highs at 17000 points with the downtrend line broken. Price action was looking way overextended but this retracement is now taking some heat out of the market but needs to stop soon before moving into corrective mode:
Meanwhile Japanese stock markets are pausing their rebound due to the higher Yen with the Nikkei 225 down 0.2% to 38837 points.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term resistance had been defended with short term price action now rebounding off former support at the 39000 point level with short term momentum and futures indicating another solid rebound:
Australian stocks were the worst in the region with the ASX200 down over 0.3% to 7737 points.
SPI futures are down marginally despite a small uptick on Wall Street overnight. The daily chart was showing a potential bearish head and shoulders pattern forming with ATR daily support tentatively broken, taking price action back to the February support levels. Momentum is finally getting out of its oversold condition but is still technically negative so I’m wary of what looks like a dead cat bounce:
European markets continued their recent reversal with selloffs across the continent with the Eurostoxx 50 Index closing 1% lower at 4953 points.
The daily chart shows price action off trend after breaching the early December 4600 point highs with daily momentum retracing well into an oversold phase. This is still looking to turn into a larger breakout with support at the 4900 point level quite firm but resistance has proven too strong overhead:
Wall Street however gained across all three bourses overnight with the NASDAQ up nearly 0.2% while the S&P500 was up about the same, still trying to get back above the 5300 point level, closing at 5293 points.
The four hourly chart shows the Friday night rebound coming up against a lot of hesitation here at the 5300 point level with short term momentum ready to launch higher, so watch for an imminent breakout:
Currency markets are moving away from USD but not in unison following the weaker ISM print with Euro making a new monthly high above the 1.09 handle before retracing on the German unemployment print.
The union currency had previously bottomed out at the 1.07 level at the start of April as medium term price action with a reprieving reversal in price action back towards the 1.09 level before its own inflation print. Medium term support was briefly tested at the 1.08 level with momentum rebounding back into the positive zone, but not able to sustain overbought conditions yet:
The USDJPY pair continued its breakdown with a steep series of selloffs overnight, eventually finishing just below the 155 level as confidence is wiped out in USD. This is likely to prove a big headwind for Japanese stocks today.
Short term momentum is now well oversold with some tentative price action suggesting a possible bottom or at least a pause here:
The Australian dollar was almost able to break the 67 cent level at the start of the week but was unable to sustain it overnight, falling back to the mid 66 cent level as traders anticipate today’s GDP print.
Early markers yesterday indicate some weakness is built into the GDP print but also the Pacific Peso itself can’t seem to take advantage of any USD weakness with momentum barely in the positive zone:
Oil markets are getting into correction mode with Brent crude falling again overnight after breaking below the $81USD per barrel level in the previous session, setting just above the $77 level.
After breaking out above the $83 level last month, price action has stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Watch daily ATR support here at the $86 level which is still broken and will likely be resistance for sometime with short term momentum quite oversold:
Gold is still failing to get back on trend as it moves further towards the $2300USD per ounce level, matching the new weekly low overnight as it retraced below the $2330 level.
Short term momentum has retraced out of oversold mode but remains negative with the mid week rebound failing to gain traction as price action on the daily chart shows a rounding top that could reverse further lower:
