IG Markets: Afternoon Report

Across Asia, regional markets are mostly higher following the positive overnight leads from the US and intense speculation the European Central Bank had been buying European debt. Both the Nikkei 225 and Hang Seng are 0.2% firmer to be the top performers while the Kospi is 0.1% higher. On the downside, the Shanghai Composite is bucking the broader trend, down 0.5%.

In Australia, the ASX 200 is currently 0.3% firmer at 4689, well of its earlier highs of 4717. Gains for the day are being led by the materials and energy sectors, with risk appetite seemingly back on the agenda thanks to improving global economic data. Elsewhere, modest gains are also being seen across the consumer discretionary and industrial sectors while the financial sector has just drifted into negative territory.

Unlike yesterday, where traders continued to buy right up until the closing bell, there’s an element of profit taking occurring. It’s not that surprising given it’s a Friday, the first weekly gain in three weeks and ahead of tonight’s hotly anticipated nonfarm payrolls number. As it stands, the market is expecting 150,000 jobs to be created, with the closely watched private jobs component forecast to show gains of 158,000.

A stronger-than-expected reading would be confirmation of the recent uptick in US economic data. While economists have lamented the “jobless recovery” to date, we may now be seeing the final piece of the puzzle fall in to place with an improving trend in weekly jobless claims and hopefully nonfarm payrolls this evening.

On the weekly chart, price action has printed the first gain in three weeks. Since the early July low, the market has been trending higher in an uptrend channel. This week’s price action shows a rally off of the lower channel line, further confirming the market’s upside bias.

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