Weekly Market Wrap
Markets globally have once again been focusing on the tensions over Syria. Trader sentiment has been boosted this week, with more improving data out of China and the US, and the prospect of a non-military intervention in Syria, but as the week comes to an end, investors turn their attention towards the US Fed meeting out next. Investors are likely to be wary ahead news from the Fed’s FOMC meeting next week, where economists are predicting the Fed will taper its monthly bond buying by around $10 billion at next week’s meeting.
The US markets have again pushed higher for a second week, with the tech-heavy Nasdaq reaching 13-year highs. The S&P500 backed away from the 1700 level, but the index is up 3.1% this month, the Dow held around 15,300 and the Nasdaq held around 13-year highs, holding on to the gains from their longest winning streak since July, as the Syrian situation could see a non-military solution and there has been more positive data out of China. Trader sentiment was boosted after President Obama asked Democratic senators to delay the vote on the proposed conduct of a strategic military operation in Syria against the regime of Bashar al-Assad. The CBOE VIX Volatility Index has eased and is now down -19% for the year. Economically sensitive stocks have led the gains for the week on the back of better US and Chinese data. The Fed will meet to discuss the “taper” of its bond buying, in the next Fed meeting on the 17-18 September. Economists are predicting the Fed will taper its monthly bond buying by around $10 billion at next week’s meeting.
European stocks markets are on track to end the week higher again and look set to test recent multi-year highs. The Europe Stoxx 600 is holding around its highest level since June 2008, after rebounding from its lowest level since mid-July last week and is now up over 11% for the year, as the ECB said it remains accommodative. Across the region mining stocks held on to recent gains after the news about the Chinese economic trade figures. The European traders are gaining in confidence on the back of the positive Chinese trade figures and the news about the delay to Syrian military intervention, but overnight trader sentiment was dampened as eurozone factory production fell -1.5 percent from June, exceeding the forecast -0.3 percent contraction. In London the FTSE is holding at 3-week highs and the German market held at 3-month highs after a sixth day of gains and looks set to test all-time highs near-term.
Asian markets have recorded their longest winning streak this year, as the US President called for a delay in military intervention in Syria and Japanese machinery order disappointed. We expect to see some profit-taking ahead of the Fed decision next week. The MSCI Pacific Index has held on to its longest winning streak in nine months. The index is now up 6.6% in the past ten days. Across the region the miners have had some good gains on the back of the good figures from the Chinese economy, but gold miners weighed again as the precious metal held around one month lows and energy stocks declined as crude oil prices eased. For the week traders’ sentiment around the region was buoyed by: improving Chinese figures confirming that economy is stablising; Japan winning the right to hold the 2020 Summer Olympics and the prospect military intervention in Syria abating. The Chinese Shanghai Composite ended higher trading around 3-month highs and is on track to close higher ten of the past eleven weeks. The Hong Kong market rose and has now rebounded nearly 20% from its June lows. The Japanese market held around its one month highs, as investors pushed stocks higher after Japan won the right to hold the 2020 Summer Olympics, with construction stocks leading the gains.
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The Aussie market reached 5-year highs this week, as investor confidence is boosted by a decisive federal election result, encouraging Chinese economic data and easing concerns over Syria. Gold miners sold off and energy stocks were down as the gold and crude oil prices sold-down as the concern over military intervention in Syria abated. Domestically the ABS released official August employment data, with unemployment at 5.8% a four high, as expected by economists, but work place participation fell to 65% the lowest level in seven years. The Australian dollar sold down on the employment figures, but is again testing the US93c level.
The market is trading off its highs for the week, backing off its long-term key level. The financials and materials sectors have been leading the gains for the week, while the gold mining stocks have weighed on the back of weakness in the gold price.
Key levels for the ASX200 index next week will be 5120 and 5280, with 5180 the key near term pivot level. Note volatility has eased this week, as the market celebrated the result the decisive the Federal election result and news from China and Syria.
Investors should be looking to take this opportunity to use options to protect their portfolio near-term, warrants can also be used. The ASX 200 and All Ords are trading at 5-year highs so we expect to see some profit-taking near-term.
Remain attuned to the news from overseas, particularly from the eurozone (Syria), China (economy) and the US (taper). Monitor the US dollar for a guide to the future direction of commodities and equities prices.
Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.
Investment Adviser D2MX Advisory
This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
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