IG Markets - Afternoon Thoughts

IG Markets - Afternoon Thoughts

Across Asia, regional markets are mostly lower, overlooking the muted rebound for US stocks on Friday in favour of the more pressing and increasingly troublesome issues confronting Europe. The Kospi is the region’s worst performer, weaker by 1.7%, while the Shanghai Composite and the Nikkei are down 0.5% and 0.2% respectively. The Hang Seng is bucking the trend to be higher by 0.2%.

Unfortunately, the Australian market has started the week well and truly on the back foot with the benchmark ASX 200 currently lower by more than 1%, having briefly fallen below the psychological 4000-point level. Losses on the session are broad based, with all sector indices in negative territory with energy, industrials and materials among the biggest percentage losers.

While US markets managed to end last week with some very modest gains after a drubbing during Thursday’s session, European markets closed firmly in the red as investors continued to grow tired of the multitude of issues plaguing Europe. It seems local investors have chosen the more cautious and pessimistic path This week’s big event is undoubtedly the EU summit – yet another one. There have been many such events over the last two years, each of which has failed to deliver anything other than disappointment and confusion. There is absolutely no reason to expect this one to be any different.

With the EU summit scheduled for the back end of this week and investors having just five days left to conclude their tax loss selling, it’s hard to see this being a memorable week for the market. Sadly it’s likely to be a painful grind, more than likely lower, on fairly subdued volume.

www.igmarkets.com.au

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