Market Update

19/06/13 - 06:15

Stan Shamu, Melbourne
 

Markets are in the eye of the storm now as we approach the much anticipated FOMC meeting.

The rise we’re seeing in equities is a sign that perhaps the QE tapering camp is unwinding some of the shorts that have dogged markets over the past few weeks.

The Asian region picked up a fairly good lead from US trade with the Nikkei (+1.3%) and ASX 200 (+0.7%) marching higher, though markets in China have struggled to gain traction. China H shares have been down 14 out of the last 15 sessions. The Shanghai Composite is down 1.2% today and the Hang Seng has shed 1.3%.

The recent spike in interbank rates continues to dog markets in China. Price action across all asset classes is showing uncertainty, and apart from a bounce in equities, it has been a quiet session in the risk space. Most of the data released, including the German ZEW economic sentiment, US building permits, housing starts and CPI, was relatively mixed.

A benign CPI reading removed any threat of rampant inflation concerns in the US. The key takeaways were that perhaps the investment community is beginning to feel it got ahead of itself with pricing out QE, and the US is not in a strong enough position for the Fed to rapidly change its stance.

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