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IG Markets Afternoon thoughts (28/09/2011)

IG Markets Afternoon thoughts (28/09/2011)

Good afternoon,

Across Asia, regional markets are mixed as caution returns to the air following the late session sell off on Wall Street amidst reports in the FT suggesting the Eurozone remains deeply divided over the second bailout package currently being discussed for Greece. The Hang Seng is the biggest loser, down 1.1% while both the Shanghai Composite and Nikkei 225 are 0.1% softer. The Kospi is 0.1% firmer.

In Australia, the market is managing to hold on to earlier gains despite widespread caution across the region. The ASX 200 is 0.7% firmer at 4034, off earlier highs of 4053. Once again, it’s the cyclical ‘risk’ sectors that are adding the bulk of the points with the energy, consumer discretionary, materials and industrial sectors all outperforming.

Whilst the Australian market is managing to hold on to the bulk of its gains, we get the feeling the optimism that has driven this short term relief rally is beginning to waver. The FT article early this morning that triggered the heavy profit taking on Wall Street quickly reminded participants that there are deep political divides throughout the Eurozone and that fixing those is going to be near on impossible.

Every time the market gets its hopes up that a solution to the Eurozone crisis is near the rug gets pulled from under it. Only when we see firm action being taken, rather than hollow promises will confidence and sentiment begin to improve Until then, we’re likely to see much of the same as any signs of strength are quickly sold into.

ENDS

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