IG Markets Afternoon thoughts

IG Markets Afternoon thoughts

Across Asia, regional markets are mixed ahead of tonight’s all important FOMC meeting. The Shanghai Composite is the region’s best performer, higher by 2.2% while the Kospi and the Nikkei are seeing gains of 0.7% and 0.3% respectively. The Hang Seng is bucking the trend to be 0.4% lower.

In Australia, the ASX 200 is currently 0.6% firmer at 4064, just off its earlier session highs of 4069. With the US market selling off late in its session there has been little conviction in today’s local trading with the index oscillating in and out of positive territory. Gains for the day are being led by the healthcare, energy, and consumer discretionary sectors with the heavyweight materials and financial names seeing more modest advances.

Today has been another wildly unpredictable day. If we needed any confirmation that these are indeed crazy times it was delivered this morning in spades with the news that Wayne Swan was voted the World’s Best Finance Minister. What??? If that is the case, the European and US economies are certainly in the soup. That said, Europe remains the main game in town, but certainly one that the market is tiring of after more than 18 months. The bottom line with Europe is that the market is flying blind at the moment and hence reacting violently to every whisper and rumour. And with all the talks, conferences and meetings going on there’s plenty of it for the market to react to. Not a great environment for conviction investing!

Tonight attention turns to the FOMC meeting. While the market is seeing “operation twist” as a given, the question needs to be asked - Will it work? To be honest we can’t see it creating any more jobs or having a material effect on longer term mortgage rates which are already tracking at near all-time record lows. Given the anticipation surrounding this meeting since the Jackson Hole symposium anything less than a “home run” from Bernanke and Fed is likely to be seen as a disappointment.

ENDS

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