ASX set for bleak start to week

3. China update: The strong possibility of thin liquidity can hamper the market today and perhaps the rest of the week, thanks to the week-long official Chinese holiday of the Golden Week. The relationship has declined somewhat recently, but the Australian markets have taken the lead in recent months of Chinese counterparts, as China's economic activity is affecting Australia.

Despite the fact that it is not yet out of the woods, the signals now seem more promising in Chinese stock indices, which have managed to hold on to significant technical support levels in the past week. The interesting story for those who have invested this week in Chinese assets will be how the USD / CNH with Chinese traders is out of step, with the Yuan vulnerable down to the very important level of 6.90, after the release of weaker Caixin PMI figures during the week-end.

4. PMI data: Speaking of PMI data, one of the important themes this week will be the release of a flow of PMI figures in different geographical areas. As an important leading indicator of economic strength, especially in view of the escalating trade war, the PMI figures have softened in recent months, presumably due to stricter trading conditions.

The bad Chinese PMI print is triggering the release of corresponding figures in Japan, the United Kingdom and the US, with traders of the industrially loaded Dow Jones, Nikkei and DAX certainly paying attention. Given a leitmotif in markets last week, the optimistic view of the Fed on global growth in the next 12 months, the data dump of global PMI data provides the first opportunity to test this proposition and then take a stand on this state from markets leading to the last calendar quarter of the year.

5. American indicesWall Street (for one) goes through a curious and hectic period while the new month is running, while traders prepare for what is typically the hottest period for US stock markets. The results for North American equities were lukewarm on Friday, with large US indices holding the day flat.

The so-so performance for US equities over the past week was still enough to ensure the strongest quarter for US equities in 5 years and to bring those markets in good contact with all time. The element of the current trading dynamics that can make or break the market this quarter is how it mixes the upcoming US intermediate conditions: US equities usually linger in the month leading to such an event, despite the fact that this round of elections seems to be a vote on the confidence, support and legitimacy of US President Trump.

6. Europe and the DAX: European markets seem to be stuck in the middle of different local and international themes. Weekend worries about Italian fiscal policy, and the ongoing fear of a Brexit without a deal and the consequences of the American-Chinese trade war for the new economic recovery of Europe.

The DAX has demonstrated the sentiment-sapping effect of this coincidence, and has been in a downward trend since mid-June, even despite rallying higher in indices with comparable trading behavior, such as the Nikkei. The downward trend line currently at 12,430 will be a huge barrier for traders, with a solid well above support at 12. 100 needed to lay the foundation for a swing in momentum and a trend reversal in the short term.

7. Oil: A status check of the activity on the oil market must be carried out to start the new week. The price of the black stuff continues to rise, due to greater concerns about production and supply on the global markets. The US sanctions against Iran seem to have more impact than first believed, aggravated by the view that OPEC + will not be bullied or hammered by US President Trump to fill the gap in the supply.

The US president has reportedly spoken out in person to Saudi Arabia, King Salman, at the weekend to discuss the case, with an emphasis on the risks that will have higher prices for global growth and market stability. No clear outcome was reported from the interaction, as some more optimistic commentators louder in their calls that no change in current trading dynamics will flow to $ 100 USD in terms of Brent Crude.

8. Market watch:

SPI futures with 23 points or 0.4% to 6171 on Saturday morning

AUD + 0.2% to 72.29 US cents

On Wall Street: Dow + 0.1% S & P 500 flat Nasdaq + 0.1%

In New York, BHP + 0.6% Rio -0.6% Atlassian + 0.3%

In Europe: Stoxx 50 -1.5% FTSE -0.5% CAC -0.9% DAX -1.5%

Spot gold + 0.7% up to $ US1190.88 per ounce 17:00 New York Friday

Brent crude oil + 1.2% to $ US82.72 per barrel

American oil + 1.6% to $ US73.25 per barrel

Iron ore + 0.8% to $ US69.24 per tonne

Dalian iron ore -1.1% to 495.50 yuan

LME aluminum + 1.6% to $ US2062 per ton

LME copper + 1.2% to $ US6258 per tonne

2-year yield: US 2.82% Australia 2.03%

5-year yield: US 2.95% Australia 2.23%

10-year yield: US 3.06% Australia 2.66% Germany 0.47% Italy 3.14% Greece 4.12%

Endurance gap between the US and Australia: 40 basis points

This column has been produced in commercial cooperation
between Fairfax Media and IG

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