IG Markets - Afternoon thoughts 30 March

Good afternoon,
Across Asia, regional markets are mostly higher following the positive overnight leads and yen weakness, which bolstered the appetite for shares of Japanese exporters. The Nikkei 225 and Hang Seng are the best performers, up 1.7% and 1.5%. Elsewhere, the Kospi is 0.8% firmer while in China, the Shanghai Composite is down 0.7%.

In Australia, the ASX 200 is currently 1.5% firmer at 4825, right on its highs of the session. Today’s advance beyond the 4800 level has been on broad-based strength, with materials and industrial names benefitting the most as investors see medium to long-term growth potential across these sectors as the global economic recovery continues to gain traction. Elsewhere, the financial, energy and consumer staple sectors are also enjoying solid gains.

Since the lows reached in the aftermath of the Japanese earthquake and tsunami, the local market has bounced sharply, up more than 330 points or 7.4%. It’s been the first time in a while that we have seen the heavily weighted materials and financials sectors rallying together; this is a powerful sign as together they account for more than 60% of the ASX 200.

It seems the local market is also being buoyed by strength among the Asian markets as they continue their recovery. We can’t see any real reason as to why the markets are moving higher; all of the macro concerns that saw them violently sell off three weeks ago are still present to some degree. For one reason or another, markets are now choosing to look beyond these concerns and focus on the positive longer-term outlook.

Sometimes, markets get like this. They will move because they want to move and not because of one specific reason. At the end of the day, markets are made up of millions and millions of buy and sell orders; we’ll never know the individual reasons behind these.

Ben Potter
Market Strategist
IG Markets

ENDS

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