US markets celebrate after Labor day, ASX futures up 42 points following an 85-point day yesterday

While Japan had a soft day yesterday, Australia, Hong Kong and China joined hands and rallied off their short-term lows - today's first chart shows that these markets are sharing similar characteristics with regard to buying support. Probably the most telling sign of bullishness was felt in the Aussie dollar last night, which has rallied one cent in the last 24 hours. I know that our FX analyst Richard Sexton has been looking for the Aussie to put in a major low; however, if a rally higher looks too impulsive, it might be the case that intra-day traders should be selling the rally, given it is now back atop its one-week range. Markets are really fickle at present - just last Monday the market was pricing in a 27% chance of an RBA rate cut at its next meeting, as at yesterday that has dropped back to 17%. Any swings in this cash rate futures market will have an impact on the Aussie dollar. So picking any change in medium-term direction on this one might be a tough gig - it remains in a down trend for now.

Yesterday's bid for Oil Search (OSH) by Woodside Petroleum (WPL) got the energy market quite excited yesterday and there were plenty of gains in that sector. Enthusiasm spilled over into the rest of the market and Australia's ASX 200 closed on its high of 5,115, which is 142 points higher than Monday's intra-day low. So we're definitely feeling a bounce at present and witnessing an unwillingness for the market to trade much below 5,000 before buyers begin picking up stocks. ASX trading volumes have come off significantly since last week and the week before, so light selling might continue to buoy the market.


Source: Rivkin, Saxo Bank

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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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