Tue, Sep 27, 2022 @ 04:44 GMT
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Pre-US update: China stock breaks critical support, AUD & NZD shrug and turn stronger

Global stock market rout continues in European session. At the time of writing, DAX is down -1.21%, CAC down -1.41%, FTSE down -1.74%. German 10 year bund yield is dropping -0.048 at 0.508. We’ll see if it can defend 0.5 handle. Italian yield rises 0.089 to 3.593. That is, German-Italian spread is back above 300 again.

In the currency markets, despite risk aversion, Australian and New Zealand Dollar are the strongest one today. One explanation is that due to global stock market turmoil, there is less risk of monetary policy divergence between AU/NZ and the rest of developed world. Of course this one is a bit far fetched. On other hand, Dollar is the weakest one, followed by Yen and Sterling.

But again, the weekly picture is usually more accurate. Yen is the strongest one followed by New Zealand Dollar and then Sterling. Canadian Dollar is the worst performing, followed by Dollar and then Euro.

In Asia, Nikkei lost -3.89% to 22590.86. Singapore Strait Times lost -2.69% to 3047.39. Hong Kong HSI fell -3.54% to 25266.37.

China Shanghai SSE dropped -5.22%, to close at 2583.46. Remember that PBoC announced some surprised measures during the last Sunday. Clearly, they’re no able to stop China from following global trend. The SSE has now closed below key support level of 2638.3 (2016 low). The whole down trend from 5178.28 is resuming. Barring any government intervention, the index will likely head towards 61.8% projection of 5178.19 to 2638.30 from 3587.03 at 2017.37 in medium term. It’s just the beginning of a serious down turn in China.

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