It’s been a positive start for
equity markets across Asia as the new trading week gets underway. Those
fractionally better than expected non-farm payrolls on Friday have served to
set the pace, although local factors have also been very much in play.
Pro-democracy protests in Hong Kong appear to be dwindling which has served to
cheer the Hang Seng, whilst another push past 110 on USD/JPY – even though it
was short lived – helped boost the Nikkei once again. The Shanghai index
remains closed for the Chinese national day holidays.
Wall Street is forecast to extend
Friday’s gains as trade gets underway later, although there’s little on the
economic calendar that is likely to provide any fresh direction in the short
term. However, the risk has to be that with the Fed still finding cause to
justify a tightening of monetary policy – and with the greenback gaining
strength too – then traders will find justification for another bout of profit
taking. Rising equity prices and an appreciating currency make for an uneasy
partnership – reaching for the sell button could be the obvious next step.
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