Tuesday, 30 September 2014

Markets | 30/09/2014 | Hang Seng slipped further as concerns continued to weigh

Equity markets across Asia have rounded out the day in something of a mixed mood, with the Shanghai Composite posting its fifth successive monthly gain, whilst the Hang Seng slipped further as concerns over the effects of the pro-democracy protests continued to weigh. The fact that the HSBC manufacturing PMI estimate for China fell short of expectations appeared to cause little concern either, but with markets in both Hong Kong and Shanghai closed for holidays in the coming days there could well be some further reaction once trading recommences. The Yen also appears to have stopped its slide – at least temporarily – and this has taken its toll on the Nikkei although assuming the economic data from Washington continues to impress then this could well be a short lived phenomena – 110 is the next level to watch for on USD/JPY.
Wall Street is eyeing a slightly higher start to the day but we do have some key economic data due for release shortly after the opening bell. Chicago PMI and the consumer confidence readings will both be under scrutiny and again if stocks are to benefit we’re going to be looking for numbers that fall in the so-called goldilocks zone. Anything too feisty will potentially be priced as baiting the Fed into a quick rate hike. For now however we’re calling the DOW up 19 at 17090 and the S&P up 3 at 1981.

Monday, 29 September 2014

Financial Times | 29/09/2014 | Hang Seng index and some concern building amongst investors

With China heading into the golden week holiday to mark the country’s National Day, the expectation may have been for regional equity markets to be looking rather uneventful, but the increasingly violent pro-democracy demonstrations in Hong Kong served to hammer the Hang Seng index during Monday’s session. There’s a real degree of concern building amongst investors, with the risk being that any kneejerk reaction by Beijing could serve to fundamentally shift the business climate in the SAR. The reaction in London has been telling too, with HSBC and Standard Chartered – two banks with notable exposure to the area – being hit hard in early trade. Elsewhere the mood has been relatively muted – Shanghai has tacked on some modest gains, undeterred by affairs in Hong Kong, whilst the Nikkei is also finding support off the back of continued Yen weakness – USD/JPY touched 109.750 overnight.
Wall Street futures are currently suggesting we’ll see a rather downbeat start to the week, with the bulk of Friday’s gains currently on course to be eroded at the open. We do have some economic data on the agenda with pending home sales and personal spending data both having the ability to sway opinion on the timing of any fed rate hike, with the new month starting on Wednesday, Friday’s non-farm payrolls can be expected to dominate. Ahead of the open we’re calling the DOW down 84 at 17029 and the S&P down 8 at 1975. 


Friday, 26 September 2014

Markets | 26/09/2014 | Wall Street suggesting a modest rebound and Q2 GDP revision due before the opening bell

Yesterday’s shake-out on Wall Street sent shockwaves across the bulk of Asian equity markets ahead of the weekend break although the Shanghai Composite managed to buck the trend and eek out some gains by the close. Despite fears of the Chinese economy slowing, we’re seeing a series of messages from Beijing that are offering highly selective stimulus measures and this appears to be providing a degree of support at least for now. There may be some additional good news ahead of the ‘golden week’ holiday that starts next Wednesday and arguably without this the gains could be construed as rather tentative.

Wall Street futures are suggesting that we’re going to see a modest rebound as Friday’s session gets underway but pushing the DOW clear of 17,000 is likely to be important psychologically if the rout is to be broken. There’s the Q2 GDP revision due before the opening bell and University of Michigan confidence data expected shortly after trade commences and either of these could be sufficient to determine whether a more sustainable rally can be found. For now however we’re calling the DOW up 53 at 16999 and the S&P up 4 at 1970.

Thursday, 25 September 2014

Markets | 25/09/2014 | Wall Street is currently set to start the day a shade higher

The mood across major Asian equity markets today has been relatively upbeat, helped along by that solid lead from Wall Street yesterday. The Nikkei is out at almost seven year highs after worse than expected economic data from Japan overnight pushed the Yen lower once again. China is also powering ahead after another stimulus in disguise note from the government supporting the development of a new raft of nuclear power plants. This should however be commended given the fact it’s a notable improvement over the use of coal fired power stations.
Wall Street is currently set to start the day a shade higher although the big risk is the durable goods order data that’s due for release ahead of the opening bell. With fears running rife that the Fed may act too hastily in hiking interest rates, if this number comes in below forecast then we could well see traders given the excuse to book profits off the back of yesterday’s gains. Ahead of the open we’re calling the DOW up 11 at 17221 and the S&P unchanged at 1998.    

Wednesday, 24 September 2014

Markets | 24/09/2014 | Drop in USD/JPY and new home sales figures and mortgage data due for release

It’s been a mixed day for Asian equity markets but the stand out winner was the  Shanghai Composite where the index jumped 1.5% off the back of fresh stimulus hopes. The driver seems to be in the smallest detail, but with state media reporting that the Bank of China plans to broader the definition of “first time mortgages”, there’s hope that this will stem the recent slide in property sales. What’s more, brokerages are also seeing brisk business pushing their shares higher as speculation builds over that link between the Shanghai and Hong Kong exchanges. Elsewhere in the region the picture has been less compelling – the Hang Seng found its way to post some modest gains but the Nikkei is sliding following a drop in USD/JPY. Comments by Prime Minister Shinzo Abe highlighted the fact he’s not necessarily ready to see the Yen go through a massive devaluation. 

Wall Street had a rough ride yesterday and futures are suggesting we might see something of a modest rebound at the open. We have new home sales figures and mortgage application data due for release either side of the opening bell so this could provide some fresh direction but arguably if prospects in Asia are looking a little more upbeat then the positive sentiment can be justified. Ahead of the open we’re calling the DOW up 9 at 17065 and the S&P unchanged at 1983.

Tuesday, 23 September 2014

Markets | 23/09/2014 | HSBC PMI manufacturing didn´t materialise. US manufacturing reading due for release

It was another broadly disappointing session for Asian equity markets as traders absorbed that news from China that the government was seen as broadly unwilling to deliver any additional stimulus measures in the near term. However there was a degree of optimism served up in the shape of the HSBC PMI manufacturing estimate – some had expressed concern that this could fall below 50 noting contraction in the sector but this didn’t materialise. As a result, Chinese equities found some support although this could well prove short lived – concerns over rising unemployment continue to weigh and there’s now a general absence of key economic releases from Beijing until the month end.
Futures markets are suggesting Wall Street will take its lead from the bulk of Asia, with some meaningful losses set to be posted at the open. Shortly after the opening bell there’s a US manufacturing PMI reading due for release but again if the market wants reassurance here it has to fall into the goldilocks zone – anything too hot will fuel speculation of a quicker rate hike by the Fed, whilst anything too cold will raise concerns about the broader state of the economy. For now however we’re calling the DOW down 28 at 17145 and the S&P down 5 a 1989.