IG Markets - Afternoon thoughts 16 March

Across Asia, regional markets are mixed as the news flow out of Japan continues to be very volatile; one minute everything is stable at the nuclear reactors and the next they are spewing smoke. The Nikkei 225 is the standout performer, up 3.5% while the Kospi and Shanghai Composite are up more than 0.4%. The Hang Seng is weaker by 0.3%.

In Australia, the ASX 200 is currently 0.5% firmer at 4550, but well off its earlier highs of 4582. Today’s trading has seen the market see-saw in line with goings on at the Fukushima nuclear plant, with investors generally a little more comfortable buying into materials names that were heavily sold down in yesterday’s panic liquidation. That said, there’s still plenty of twitchy investors with their fingers on the “sell” button.

The materials and energy sectors have been the biggest winners in today’s modest advance, with the financials also managing to edge into positive territory. The consumer staples, healthcare and property trust sectors are all down on the session

Whilst we haven’t seen the panic selling of yesterday, the market still remains glued to the happenings in Japan, in particular the Fukushima nuclear plant. Whilst things seem to be a bit more stable than yesterday, we get the feeling there’s still an enormous amount of uncertainty.

It continues to be an arm-wrestle between ‘panic merchants’ who hit the sell button on any negative headline and those investors with a longer term time-horizon who look at these sell offs as great buying opportunities.
Whilst there’s been a reasonable amount of bargain hunting in the market today, we’ve also seen a lot of short covering which helped fuel the sharp rebound in many stocks. However, once the short covering dried up, stocks drifted lower again, with a lack of buyers evident.

Ben Potter
Market Strategist
IG Markets

ENDS

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