Thanks Brit and morning regulars. Half-time round-up: Australian...

Thanks Brit and morning regulars.


Half-time round-up:

Australian shares hit a three-week high this morning as the domestic market once again ignored soft overnight leads.

At lunchtime the ASX 200 was trading 82 points or 1.4% ahead at 5795 and on track to finish more than 1oo points higher for the week. Gold stocks +2.3% and financials +2% were the stand-outs. Other notable rises included energy +1.5%, telecoms +1.5% and consumer discretionary +1.4%.

The ASX has shaken off its slavish mimicry of Wall Street this month, moving in the opposite direction more often than not. In the last three weeks, the ASX 200 has moved against the overnight direction on the S&P 500 nine times out of fifteen sessions.

Chinese shares extended yesterday's 6.5% dive. The Shanghai Composite was lately down 0.68%. Hong Kong's Hang Seng was up 0.11% and Japan's Nikkei 0.26%. Dow futures were down six points or less than 0.1%.

"Although numerous triggers have been proposed for Thursday’s nearly 7 percent fall in the Shanghai Composite, none of these seem likely to have had a large enough impact on fundamentals to explain such a sizable move," economists at Capital Economics told Reuters. "Instead, it was probably driven by a wild swing in sentiment. With valuations divorced from economic fundamentals, the heightened volatility we have seen is likely to continue."


Back home, sales of new homes rose for a fourth straight month during April. Sales increased by 0.6%, following a 4.4% surge in March, according to HIA data.

Crude oil futures rallied 66 cents this morning to US$58.34 a barrel. Spot gold was 70 cents firmer at US$1,188.80 an ounce. The dollar was buying 76.65 US cents.


I don't envy index traders in this environment. Anyone got an explanation for the scale of this morning's rally? Money flowing from Chinese shares into our market? Overseas traders taking advantage of 'temporary' weakness in the dollar to buy in? Might be that yesterday's grim business investment data has belatedly convinced the instos that another rate cut is a near certainty. I did the comparison above between the ASX 200 and S&P 500 just to confirm that I wasn't imagining the disconnect between the two. While there have always been periodic divergences in performance in the 12 years I've been trading, I can't recall anything similar to what we're seeing now, where the Australian market is more likely to trade against against the US trend than follow. Whatever is going on, it looks very much like we scored a trend reversal on the XJO this week with two higher highs and a lower low. Confirmation next week? Trading: nice morning for swing trading. In and out of CLQ three times and used the early weakness in CKK for a quick couple of pips. Too tentative on PRR and ACL.