Asian markets fail to share Wall Street’s positivity

Asian markets fail to share Wall Street’s positivity

By Tim Waterer (Senior Trader, CMC Markets)

Despite the Nikkei taking an early liking to the weaker Yen, most markets across Asia failed to share the Wall Street positivity in the wake of Fridays US jobs report. With the US Dollar being the prime beneficiary of the robust Non-Farm Payrolls report, the resulting commodity price weakness has impacted the performance of indices such as the ASX200 where there is a high concentration of resource stocks.

Materials stocks on the Australian market and in particular the gold miners were subjected to considerable selling pressure today in response to the downward movement in commodity markets. Elsewhere, Hong Kong and Chinese equities lost ground as attention again turned to how the PBoC may manage monetary policy in the face of slowing growth in the world’s second largest economy. Despite the rousing performance by US stocks after the jobs data, Asian markets still found reason for negativity today.

The Aussie Dollar operated in a tight range today with the currency attempting to stem the bleeding after Friday’s sharp fall. The AUD has recently fallen victim to sustained greenback strength, with traders positioning for possible September QE tapering. Combined with the likelihood of at least another 25bp of tightening between now and year end from the RBA, this has resulted in diverging fortunes for the Aussie and US Dollars in recent times. Should the US Dollar remain on its upward trajectory the rest of this week it could be just a matter of when and not ‘if’ the AUDUSD rate trades below the US$0.90 level. Market interpretation of the US FOMC minutes mid-week as well as Australian jobs data on Thursday will have a large bearing on which side of the US$0.90 level the AUD ends the week.

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