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30.09.22 Macro Morning

By Chris BeckerMarket OverviewSep 30, 2022 09:41
au.investing.com/analysis/300922-macro-morning-200527624
30.09.22 Macro Morning
By Chris Becker   |  Sep 30, 2022 09:41
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Recession concerns in the US weighed on risk markets again overnight, with Wall Street selling off sharply, as Trusseconomics is exposed in the UK as another Tory sham. More shams with Russia annexing parts of Ukraine plus more gas disruptions are shaking up currency and bond markets with Euro lifting to a weekly high, but still well below parity. 10 year US Treasuries pushed back below the 4% level with interest rate expectations still looking at another 150bps in rises by January. Commodities were mixed with oil markets retracing slightly as Brent crude hovered at the $88USD per barrel level while gold also bounced off its recent monthly low to finish overnight at the $1660USD per ounce level.

 

Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were the standouts by failing to bounceback alongside overnight markets with the Shanghai Composite down 0.2% to 3041 points while the Hang Seng Index can’t get a break, down another 0.5% at 17145 points. The daily futures chart is still showing a very bearish mood with a bear market continuing as daily momentum remains well deep into negative funk, but initial signs of selling exhaustion are not translating into a deceleration at all:

Japanese stock markets however recovered somewhat, with the Nikkei 225 closing nearly 1% higher at 26422 points. The daily chart shows price action still on a dominant downtrend after the recent dead cat bounce up to the 28000 point level with support at the 27000 point level a distant memory. Daily momentum remains negative and oversold with successive new daily low sessions pointing to a test of the June lows. Futures are indicating another pullback today with the significant level of support at the 25500 point level likely to be tested:

Australian stocks were the best in the region, this time to the upside with the ASX200 gaining more than 1.4% to close at the 6555 point level, bouncing off its recent monthly low. SPI futures however are indicating a small pullback of around 0.3 to 0.4% on the open, which could extend into further losses given the negative sentiment as the trading week ends. The daily chart shows price action testing the June lows as daily momentum swings back from full oversold mode, as buying support tries to build here:

European stocks returned to loss making mode with falls across the continent, with more losses in post close futures. The Eurostoxx 50 Index eventually finished 1.6% lower at 3279 points overnight with the daily chart showing price action overextending below the June lows at the 3300 level. The small possibility of a swing higher on the back of the BOE actions has been thwarted already as daily momentum remains well oversold and this bear market continues to gather pace:

Wall Street suffered a similar fate with even bigger losses after a midweek hesitation has turned into another selloff. The NASDAQ lost nearly 3% in a one way dive while the S&P500 finished 2.1% lower at 3640 points. The daily chart clearly illustrates a steady downtrend similar to all other major stock markets with key trailing ATR resistance a long way off as price hovers above the June lows (lower black line). Daily momentum had been indicating some deceleration here but support will come under enormous pressure here for a big break below:

Currency markets are slowly diverging in trajectory against USD with Euro making a stronger comeback alongside Pound Sterling while commodity currencies remain under pressure. The union currency has built on its bounceback to cross the 98 handle this morning and 97 handle and break above four hourly resistance to make a new weekly high. Momentum has swung from very oversold settings with the four hourly chart indicating selling pressure has nearly evaporated as this swing play keeps moving higher:

The USDJPY pair remains in a holding pattern however, still stuck just above the 144 handle overnight in a relatively mild move versus some of the other undollars. Short term momentum has retraced from being barely overbought to a neutral setting, with price rebuffing against obvious resistance at just below the 145 level where its likely to be rebuffed as before, although no new session lows is promising:

The Australian dollar failed to move higher alongside other undollars, remaining contained just below the 65 handle after almost cracking through the 64 cent level in the previous session, moving in line with risk markets. This doesn’t change my contention that resistance is just too strong at all the previous levels with the 68 handle still the area to beat. This swing play has the potential to get back to the 66 level but needs a bigger punch through the high moving average first:

Oil markets are trying to hold on to their nascent gains after a series of attempts to stabilise after its collapse on Friday night, with Brent crude hovering just below the $88USD per barrel level overnight. I still contend that this is still a minor move given that daily momentum had been persistently negative with price action not yet above the high moving average with short term resistance at the $96 level still quite firm:

Gold held on to its recent sharp move higher, pushing ahead of other undollars to finish at the $1660USD per ounce level overnight after some hesitation in the Asian session yesterday. This keeps the shiny metal off the 2020 lows but still doesn’t negate the multi-monthly bearish setup with short term resistance at the $1700 level not yet under threat:

30.09.22 Macro Morning
 

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30.09.22 Macro Morning

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