EQUITIES: Back On A Positive Footing
Regional equity sentiment has improved as the session progressed. Most of the major indices are tracking higher, while US futures haven't deviated too far away from flat, with eminis holding close to 3942 for now.
- Familiar themes still look to be in play. The HSI is up +1.3%, with the tech index +1.40%. In NY trade the Golden Dragon index rose over 1.7%. Signs of less regulatory overhang continue to benefit the tech related space.
- Mainland shares are also up, but only by a modest 0.15% for the CSI 300.
- Japan shares continue to recover, the Nikkei 225 up 1% at this stage. Positive earnings news supported in the electronics sector.
- The Kospi (+0.65%) has outperformed the Taiex (-0.35%), with offshore investors adding +$131.2mn to local Korean shares.
- The ASX200 is up nearly 15, as commodity prices (led by iron ore and copper) continue to gain on China recovery hopes.
- Indonesian stocks remain underperformers, down a further 0.5%.
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Historical bullets
BUND TECHS: (H3) Pullback Considered Corrective
- RES 4: 144.46 1.50 proj of the Oct 21 - 28 - Nov 8 price swing
- RES 3: 143.68 1.382 proj of the Oct 21 - 28 - Nov 8 price swing
- RES 2: 143.00 Round number resistance
- RES 1: 141.94/142.91 High Dec 9 / 7 and the bull trigger
- PRICE: 140.48 @ 05:11 GMT Dec 12
- SUP 1: 140.27 Intraday low
- SUP 2: 139.62 Low Nov 29
- SUP 3: 136.13 Low Nov 28 and a key short-term support
- SUP 4: 138.34 Low Nov 18
The Bund futures trend direction is up and the latest pullback is considered corrective. The cross traded higher last week. Resistance at 141.94, the Nov 24 high, has recently been breached and moving average studies have crossed, to highlight a bull mode condition. This signals a stronger reversal. Potential is seen for a climb to 143.00. Firm support has been defined at 139.13, the Nov 28 low.
AUSTRALIA: Westpac: Card Activity Confirms Solid Start To Sales Season
Westpac note that their “Card Tracker Index lifted strongly over the two weeks to Dec 3, jumping 10pts to 146.8. Some of this is almost certainly a transitory lift associated with Black Friday and ‘Cyber- week’ sales. While the Index is adjusted for regular seasonal variations the limited history means its not yet possible to do this with complete precision for week-to-week reads. The extent of any underlying strengthening will depend on how much the index retraces over the rest of Dec. That said, the profile is tracking closely in line with previous Nov-Dec sales periods meaning the question is whether momentum may be lifting over and above regular seasonal variations rather than whether its dropping off.”
BONDS: NZGBS: Early Cheapening Holds Despite Light Firming in U.S. Tsys
NZGBs weren’t interested in adjusting alongside the modest richening in U.S. Tsys after ticking lower at the re-open, extending as U.S. Tsys initially cheapened, then holding losses during the light Tsy rally. That left the major NZGB benchmarks 3-4bp cheaper at the bell, with very limited bear steepening apparent.
- Post-U.S. PPI adjustments and focus on this week’s HYEFU (which could provide a slightly more benign budgetary projection given the economic outlook/higher short-term issuance needs) were in the driving seat.
- Elsewhere, payside swap flow seemed to help, with the major swap benchmarks running 4.0-5.5bp higher at the bell, as 5s led the move higher, resulting in swap spread widening.
- The major short-dated OIS measures firmed incrementally, with ~68bp of tightening priced for the Feb ’23 meeting and a terminal OCR of ~5.45% eyed.
- Weekend news flow saw PM Ardern’s ruling Labour Party lose a by-election, and therefore a seat in parliament, pointing to (previously documented) headwinds in next year’s general election.
- Looking ahead to later this week we have a busy local docket, Tuesday will bring REINZ house price and food price data. Further out, we get the aforementioned HYEFU, Q3 current account and GDP data, the BusinessNZ m’fing PMI and RBNZ Governor Orr’s latest parliamentary appearance.
