13/10/10 - 15:30
Ben Potter, Research Analyst
Afternoon thoughts from the Trading Room – 3.30pm
Across Asia, regional markets are mixed following the positive overnight price action from Wall Street. The Nikkei 225 is the top performer, up 0.6% while the Korean Kospi is 0.1% firmer. On the downside, both the Hang Seng and Shanghai Composite are lower by 0.1%, with the Chinese reporting that their trade balance was slightly lower-than-expected at 16.9b vs 17.3b forecasts.
In Australia, the ASX 200 is currently 0.2% firmer at 4629, well off its earlier highs of 4656. In what has been a choppy session, the steadfast performers have been the materials, industrials and consumer discretionary sectors. Financials, healthcare and energy sectors have been more volatile, oscillating in and out of positive territory.
The local market opened the session stronger this morning following the constructive overnight leads. Once again, the positive session on Wall Street was supported by the talk of further quantitative easing, especially after dovish FOMC minutes. It sounded like the Fed was willing to move a little quicker than what the market had been anticipating, which spurred a bit of buying.
This, combined with an excessive selloff in the Australian market yesterday easily explained the higher open. Nonetheless, the sellers soon moved in, offloading the banks following a story in the Financial Times in London. It reported that Standard Chartered will announce a GBP5 billion rights issue in the not too distant future.
The market fell on this report, with traders citing a high correlation between Standard Chartered and Australian banks. However, on closer analysis this connection looks fairly far-fetched. At the end of the day, Australian banks are in far better shape than their UK counterparts, so it’s hard to fathom why traders would sell just based on this story.
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