Across Asia, regional markets are all lower following the disappointing set of leads from Friday’s US session that saw
the major indices all close down more than 1.5% on continuing worries of the state of global growth. The Hang Seng and
Kospi are the worst performers, both down 1% while the Shanghai Composite is 0.5% lower. The Nikkei 225 is flat for the
session amidst talks of Bank of Japan intervention in the currency market.
In Australia, the ASX 200 is currently 0.3% firmer at 4115, well off its earlier highs of 4160 but also well off its
early morning lows of 4078. Today’s skittish price action is evidence of a market that doesn’t know what to do next.
There are plenty of bears out there calling for further significant falls, but at the same time there are just as many
optimists suggesting equities at current levels are a fantastic buying opportunity.
Gains on the session are relatively broad based with all but the telecoms, consumer discretionary and industrial sectors
in positive territory. Among the day’s advancers the biggest percentage gainers are the healthcare, energy and materials
sectors while the heavyweight financial sector is trading flat.
We’re seeing a classic battle between the bulls and bears today. The bears won the first half an hour of trade until
what looked to be a large portfolio buy order saw the market reverse and rally strongly. As quickly as it came it was
gone, with the bears reasserting their control around midday and driving the market lower into the afternoon session.
Although we’re seeing some stocks react to earnings reports and stock specific news stories, it really is all about the
macro picture at the moment. Even though the ASX 200 has outperformed over the last week, and could well do so in the
coming months, if global markets are heading lower then unfortunately we’re going to get dragged along for the ride.
Tonight, there is nothing of note due on the economic calendar so markets are going to remain at the mercy of fickle
sentiment and confidence. Tomorrow night sees the release of European manufacturing data, which could once again ignite
volatility. As the week develops, everyone will be talking about the Jackson Hole Symposium which starts on Friday. All
eyes are on Fed Chairman Bernanke and what he has, if anything in his basket of tricks to help the global economy.
Ben Potter
Market Strategist
IG Markets