IG Markets – Afternoon Thoughts

IG Markets – Afternoon Thoughts

Across the region, Asian markets are all trading in negative territory, but off session lows after US retail sales missed expectations and the Federal Reserve Board cut its growth forecast. Reports from China showing growth had eased to 10.3% helped markets bounce a little. The Nikkei is the worst performer, down 1.1% while the Shanghai Composite, Hang Seng and Kospi are all weaker between 0.3% and 0.4%.

Domestically, the ASX 200 is 0.6% lower at 4435.7, having traded as low as 4427 earlier. Shortly after noon, China’s GDP data saw the market jump to a three-week high but it has since faded. There’s no real theme to today’s trade, with both defensive and cyclical sectors leading the way lower. Healthcare and consumer staples are 1.2% and 0.8% softer, while materials and energy names are also detracting significant points.

The impressive thing to come out of the Chinese data today was that the brakes are working. The government’s effort to slow the economy and ease fears of ‘overheating’ has been successful, which should be seen as a positive. At the end of the day, China is the global growth engine. They’re demonstrating that they have very good control of that engine.

Despite the jump higher on the back of the Chinese data, trade has been quiet and muted, with very little for traders to hang their hats on. Everything at the moment is centring on US leads and what happens with Q2 earnings reports. With very few leads overnight and some weaker economic data, it’s hardly surprising to see our market putting in a ‘wishy washy’ performance.

Tonight’s leads should give traders a little more to chew on tomorrow morning, with results from JPMorgan and Google expected, as well as US manufacturing numbers.

ENDS