IG Markets: Afternoon Thoughts

IG Markets: Afternoon Thoughts

Good afternoon,

In Asia, regional markets are mixed in Friday afternoon trade after US markets gained on the back of strong jobless claims and trade data. Japan’s Nikkei 225 is the biggest gainer, up 1.1% after the nation’s Q2 GDP was revised upwards. Elsewhere, the Kospi is 1% higher while the Hang Seng and Shanghai Composite are both in negative territory.

In Australia, the ASX 200 is currently 0.2% weaker at 4571, just above its lows of the session. Earlier in the day the benchmark index tested but failed to breach the 4600 level, running out of momentum as the materials, energy and financial sectors all turned negative. The healthcare sector is the worst performer of the day while the property trust sector is the session’s biggest percentage gainer.

The 4600 level is the neckline of a bullish inverted head and shoulders reversal pattern. There is typically a lot of resistance at these key levels so we’re not surprised by the amount of selling.

Nonetheless, we thought the bullish trade figures out of China might have been enough to see the market push higher Particularly after import data showed a strong turnaround from last month’s weaker-than-expected growth numbers which precipitated Chinese growth concerns and the August selloff.

It also looks like we’ve seen a bit of the typical end-of-week profit taking. Heading into the session the local market was up 1.1%. Given it is September, participants are happy to book even the smallest of profits in what is historically one of the weakest months for equities.

ENDS

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