IG Markets, Afternoon Thoughts

IG Markets, Afternoon Thoughts

Across Asia, regional markets are all seeing profit taking to end the week despite the moderately positive leads from US markets. There’s an element of nervousness ahead of some important Chinese data due for release tomorrow. The Hang Seng is the worst performer, down 0.7% while both the Nikkei 225 and Kospi are down 0.4%. The Shanghai Composite is flat for the day.

In Australia, the ASX 200 is currently flat at 4742 having traded in a tight range all session. Today’s trading has been notable for the continuing rotation into financials at the expense of the materials space, which is suffering today after an overnight retracement in commodity prices. Strong import and export numbers out of China this afternoon have failed to excite any buying in the sector heading into the weekend. Elsewhere, modest gains in the energy sector are being offset by losses in the industrial and consumer sectors.

At the end of another positive week for the local market, we’ve seen an element of profit taking in play as traders look to square the books ahead of the weekend. With a swag of heavy-hitting Chinese data, including the potential for a rate rise due over the weekend, a lot of participants seem happy to assess the situation from the sidelines.

It was very positive to see the S&P 500 closing at two-year highs above the 1228 level, the heavily watched 50% Fibonacci retracement level of the bull market high to bear market low. The initial euphoria surrounding a deal on tax cut extension has given way to the reality that it actually has to be passed by Congress; as we’ve seen in recent days, this is never a smooth process and has the ability to hinder, if not halt the rally.

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