IG Markets - Afternoon thoughts

IG Markets - Afternoon thoughts

Good afternoon,

Across Asia, regional markets are all higher as they head towards the weekend. Returning from a Bank Holiday, Japan’s Nikkei 225 had been down more than 1.3% but has rallied all the way back into positive territory on speculation the BOJ had once again intervened in the currency markets. Elsewhere the Hang Seng is higher by 0.3% while the Kospi is seeing gains of 0.5% The Shanghai Composite is closed.

In Australia, the ASX 200 is currently 0.5% weaker at 4608, but well off its earlier lows of 4585. Losses for the day are broad based with all sectors in negative territory however selling is most notable in the materials, financials, utilities and information technology sectors. The defensively orientated healthcare sector is the only sector approaching positive territory for the day.

It was a fairly lackluster session until rumours hit the market mid afternoon that the Bank of Japan had intervened in the foreign exchange market again. This saw the USDJPY and AUDJPY jump higher, as did the Nikkei 225 as exporters received a boost from the weaker yen. The local market also jumped higher, led by financials as they have a strong correlation with the AUDJPY.

Tonight’s session will be closely watched with the latest reading on Core Durable Goods Orders due for release. Also, traders will be watching to see if the S&P 500 can manage a weekly close above the June highs of 1131. After convincingly breaking out to 1142 on Monday, the last three trading sessions has seen the market drift lower, with professional money looking to shake out the weak long positions.

ENDS

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