IG Markets - Afternoon thoughts

IG Markets - Afternoon thoughts

Across Asia, regional markets are surprisingly trading materially higher despite a lack of any obvious catalysts from last night’s European and US sessions. The Hang Seng is the region’s best performer, higher by 1.5%, while the Nikkei and Kospi are both 0.6% firmer. The Shanghai Composite is up 0.5%.

In Australia, the ASX 200 is currently 1% firmer at 4147, just off its earlier session high of 4153. After a sluggish start, gains for the local market accelerated around midday, somewhat surprisingly, with all sectors now trading in positive territory. Financial and energy names have been relatively well supported all day thanks to positive leads from their US peers, however is has been the turnaround in the materials sector that has helped propel the market forward.

This morning we commented on an expected flat open and probable mundane session. Based on what we saw overnight , there seemed little to suggest we would see any material movement in either direction, so today’s current 1% advance on seemingly ‘no news’ has us scratching our heads. Still, it’s good to see the market can still confound us. Perhaps today’s price action is just a function of the market being sick and tired of all the doom and gloom. Perhaps the worst case scenarios for Europe, China, and the US are already priced into the market. Perhaps investors are starting to see the probability of ‘the worst case scenario’ being highly unlikely. Or investors may be starting to ask ‘what could go right?’ The market is clearly oversold and investors are certainly underweight equities – you only have to see the record funds flow into bonds and the anaemic yields to realise this. With this being the case, it might only take a small amount of good news to trigger a sizeable bounce for equities. All we need now is a catalyst.

www.igmarkets.com.au

ends

© Scoop Media