IG Markets – Afternoon Thoughts

IG Markets – Afternoon Thoughts

Across Asia, regional markets are mixed after a flat close on Wall Street last night. The Kospi is the region’s best performer, higher by 0.3%, while the Hang Seng is seeing a gain of 0.2%. Elsewhere, the Nikkei 225 and the Shanghai Composite are seeing losses of 0.5% and 0.3% respectively.

In Australia, the ASX 200 is currently 1.2% weaker at 4137 just off its earlier session low of 4130. Despite US markets finishing relatively unchanged, the Aussie market looks like it’s paying the price for its relative outperformance yesterday, with all sectors currently in negative territory. The biggest losers on the day are the energy, industrial and materials sectors, each with losses of more 1.4%.

Earlier in the week we suggested this initial January period was akin to ’junk time‘ in a sporting context, and that it wouldn’t really be until mid January at the earliest when money managers had returned from their festive season holidays that we’d get a real assessment of the market’s mood for 2012. With so many market participants still away on holidays, you can expect to see the kind of ‘meaningless’ 1% plus up and down days we have seen so far this year. There is a want by some to read more into these moves than they deserve. To be honest, such moves in this early part of the year should be met with a shrug of the shoulder.

What will be worth taking note of tonight is the US ADP private sector jobs report, as it will be looked upon to confirm the upwards trajectory in the US economy. With European issues set to be a dominant theme throughout 2012, the balancing act that will provide the market some stability is an improving US economy, led first and foremost by a more buoyant jobs market. A better-than-expected number tonight will set us up for a strong non-farms payroll report on Friday night, which in turn will go a long way to establishing sentiment for when things do start to count toward s the end of January.

ends

© Scoop Media