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Asian Stocks Torn On Volatility After Big US Drop And Before Bailout Vote
Written by John Kicklighter, Currency Strategist
Direction for the Asian markets will be driven by a number of different factors. The most immediate ingredient for price action was the aggressive selling that didn’t’ pick up steam until the second half of the US session
Asia: Watch To Watch For
• Asian Stock Futures Mixed Despite US Guidance
• Will The US Stem The Financial Bleeding? Is This A Global Fix?
Asian Stocks Torn On Volatility After Big US Drop And Before Bailout Vote
Direction for the Asian markets will be driven by a number of different factors. The most immediate ingredient for price action was the aggressive selling that didn’t’ pick up steam until the second half of the US session – that suggests the turn in sentiment is relatively fresh and likely to carry over to the Asian markets. However, there is a greater damper for volatility looming just ahead. The US House of Representatives is prepared to vote on the second version of the bail-out bill for Friday. However, the market won’t have an answer as to whether the credit markets will find some relief mostly likely until the afternoon of the US session – well after the Japan and its fellow markets close. Taking on fresh positions before such a macro event would be inviting incredible risk. Therefore, volatility and direction will likely reflect investors hunkering down for a potential storm.
Nikkei 11,154.76
Futures activity shows the Nikkei 225 is set for a strong open; but the pace set by the US markets and a look to event risk ahead suggests this will quickly change. Japan itself has not macro data that would act as a good trigger for a broad reaction from shares. On the other hand, a look at the performance of the major US sectors shows the there will be considerable weights on some of the key sectors of the Japanese market – particularly in the financial sector. On the other had, the sharp drop in commodities may help to ease the pain, though its implications for growth probably mean more of a dour outlook for returns and business activity.
Hang Seng 18,211.11
After the mid-week holiday, the Hang Seng index came back with a bullish edge. This certainly will be difficult to sustain as the dominate bear trend reflects the overwhelming bias towards a global economic slowdown and ongoing uncertainty in the financial market. The Congressional vote following the Asian market close will likely encourage caution in the risk-sensitive finance and property indexes. Another consideration for price action will be the return of Chinese traders to the markets after an extended holiday. Regulators and policy officials in China may make a move to instill confidence in domestic markets rather than keeping them open to the whims of the US government.
S&P/ASX 200 4,761.10
Australia’s benchmark equities index is set for a sharp decline on Friday’s open. The ASX 200’s leverage in financial and resource producing firms will be a significant burden for the market. With the guidance of the sharp declines from US stocks, the risk aversion from the US session will almost certainly carry over to the Sydney. The banking and financial services group will come under pressure as investors try to reduce their exposure to any stocks that are will be highly leveraged against the bailout vote in the US - it is a long weekend to fret about gaps. Another major movers will likely be the mining and resource producing groups. Commodity prices plunged on North American exchanges, with oil down 4.6 percent and gold also tanking 4.7 percent.
Written by John Kicklighter, Currency Strategist
Direction for the Asian markets will be driven by a number of different factors. The most immediate ingredient for price action was the aggressive selling that didn’t’ pick up steam until the second half of the US session
Asia: Watch To Watch For
• Asian Stock Futures Mixed Despite US Guidance
• Will The US Stem The Financial Bleeding? Is This A Global Fix?
Asian Stocks Torn On Volatility After Big US Drop And Before Bailout Vote
Direction for the Asian markets will be driven by a number of different factors. The most immediate ingredient for price action was the aggressive selling that didn’t’ pick up steam until the second half of the US session – that suggests the turn in sentiment is relatively fresh and likely to carry over to the Asian markets. However, there is a greater damper for volatility looming just ahead. The US House of Representatives is prepared to vote on the second version of the bail-out bill for Friday. However, the market won’t have an answer as to whether the credit markets will find some relief mostly likely until the afternoon of the US session – well after the Japan and its fellow markets close. Taking on fresh positions before such a macro event would be inviting incredible risk. Therefore, volatility and direction will likely reflect investors hunkering down for a potential storm.
Nikkei 11,154.76
Futures activity shows the Nikkei 225 is set for a strong open; but the pace set by the US markets and a look to event risk ahead suggests this will quickly change. Japan itself has not macro data that would act as a good trigger for a broad reaction from shares. On the other hand, a look at the performance of the major US sectors shows the there will be considerable weights on some of the key sectors of the Japanese market – particularly in the financial sector. On the other had, the sharp drop in commodities may help to ease the pain, though its implications for growth probably mean more of a dour outlook for returns and business activity.
Hang Seng 18,211.11
After the mid-week holiday, the Hang Seng index came back with a bullish edge. This certainly will be difficult to sustain as the dominate bear trend reflects the overwhelming bias towards a global economic slowdown and ongoing uncertainty in the financial market. The Congressional vote following the Asian market close will likely encourage caution in the risk-sensitive finance and property indexes. Another consideration for price action will be the return of Chinese traders to the markets after an extended holiday. Regulators and policy officials in China may make a move to instill confidence in domestic markets rather than keeping them open to the whims of the US government.
S&P/ASX 200 4,761.10
Australia’s benchmark equities index is set for a sharp decline on Friday’s open. The ASX 200’s leverage in financial and resource producing firms will be a significant burden for the market. With the guidance of the sharp declines from US stocks, the risk aversion from the US session will almost certainly carry over to the Sydney. The banking and financial services group will come under pressure as investors try to reduce their exposure to any stocks that are will be highly leveraged against the bailout vote in the US - it is a long weekend to fret about gaps. Another major movers will likely be the mining and resource producing groups. Commodity prices plunged on North American exchanges, with oil down 4.6 percent and gold also tanking 4.7 percent.
