US markets higher, but traders remain cautious - ASX futures 31 points higher

The ASX 200 staged a turnaround yesterday and closed fairly strongly, following US stock index futures higher to close just in the green and over 85 points higher than its session lows. The positive sentiment stuck and US markets last night put on healthy gains, especially the NASDAQ technology index, which finished 2.46% higher. You can see on today's second chart that while buyers are emerging, the ASX 200 index futures are only about 100 points from their daily closing lows and thus we are yet to build up a big buffer of buying support - so there's simply no room for complacency.

Today's first chart shows the implied S&P 500 volatility (VIX), which remains elevated despite equity market strength overnight. Once again I'll refer back to the periods in 2010 and 2011 where elevated volatility hung around equity markets for months, so just set your expectations right, make sure you like the look of your portfolio and remain focused on your multi-year horizons if you're an investor.

Short-term swings in sentiment have created a challenging environment for traders; however, I will note that Rivkin Global members have been on the right side of last week's weakness and yesterday's turnaround in sentiment, so it certainly does pay to have access to a professional trader like Rivkin's Global Investment Director Oliver Gordon in a market like this if you have a focus on trading. Investors are also being offered a chance to grab some decent yields from ASX 50 stocks, and yesterday an ad-hoc list of 10 high-income blue chip stocks was put together for those wanting to top up during the weakness - if you'd like a copy of this report, just email customerservice@rivkin.com.au and one of Rivkin's Relationship Managers will email it to you. A reminder to everyone that the next formal Blue Chip strategy will be released at the beginning of next month.

The last chart today is a long-term view of the Australian dollar (AUDUSD), which yesterday dipped into the 69c zone following a lower-than-expected quarterly Australian GDP growth figure that took annualised growth in Australia to 2.0% versus expectations of 2.2% and a previous quarterly read of 2.5%. The AUDUSD recovered to be now trading at US 70.5c and will probably draw on Friday night's non-farm payroll figures and unemployment rate in the US for a bit of direction. Once again this is proving a tough currency pair to trade at present due to its absence from these levels for so many years. You can see in the last chart that it hasn't been below 70c since the GFC and traders will be keen to find out whether any more poor economic news in Australia might increase talk of another rate cut from the RBA, and we have local employment figures out on September 10. However, the RBA is waiting to see what the US Federal Reserve does after its 16-17 September meeting - so the Aussie is probably going to rely upon risk-on/risk-off moves in equity markets for direction until then.


Source: Rivkin, Saxo Bank

To view the Rivkin economic calendar and Global Markets matrix, members can click here.

This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

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