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Marketmind: Sell the rip

Economy Sep 04, 2022 05:05PM ET
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© Reuters. FILE PHOTO: People pass by an electronic screen showing Japan's Nikkei share price index inside a conference hall in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato/File Photo

(Reuters) - A look at the day ahead in Asian markets from Jamie McGeever

Wall Street's lurch into the red late on Friday sets a negative tone for the open in Asia on Monday, a stark reminder that investors are still far more inclined to sell into pockets of strength in riskier assets right now than push them higher.

August purchasing managers index (PMI) reports on Monday from Australia, Japan, China and India could deepen or alleviate the general sense of gloom, but the U.S. close last week suggests any relief might be fleeting.

U.S. markets are closed for the Labor Day holiday so liquidity will be lighter than normal, while European markets will digest the news that Russia scrapped a Saturday deadline to resume flows via a major gas supply route to Germany.

The impact of Europe's energy crisis on global financial markets cannot be ignored.

It wasn't meant to be like this after Friday's non-farm payrolls report painted a "Goldilocks" scenario of the U.S. jobs market for the Fed - slowing but still solid job growth, and cooling inflationary pressures from slowing earnings growth.

But stocks failed to hold onto the early gains, despite the pullback in bond yields, implied interest rates, and the dollar.

 

(GRAPHIC-U.S.-Japan 2-year yield spread: https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgnwqdpb/USJP.png)

 

The dollar will bear close monitoring, having hit a 24-year high on Friday against the yen above 140.00 yen. Japan's Finance Minister Shunichi Suzuki said G7 financial leaders did not discuss FX on Friday, but insisted that sharp moves in exchange rates are undesirable.

Meanwhile, U.S.-China tensions continue to taint regional sentiment. The State Department on Friday announced a potential $1.1 billion sale of military equipment to Taiwan, a measure that the Chinese Embassy in Washington said "severely jeopardizes China-U.S. relations and peace and stability across the Taiwan Strait."

All in all, a challenging environment for Asian markets on Monday.

Key developments that should provide more direction to markets on Monday:

Australia services, composite PMIs (Aug, final)

Japan services, composite PMIs (Aug, final)

China Caixin services PMI (Aug)

India services PMI (Aug)

South Korea FX reserves (Aug)

 

 

Marketmind: Sell the rip
 

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Comments (10)
bubble burst
bubble burst Sep 04, 2022 7:42PM ET
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everything spells bear market
BD
BD Sep 04, 2022 7:18PM ET
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When the Feds are supporting free money with zero rates, buy with both hands. When the Feds are intent on destroying the economy and stock market to shut down inflation, sell and short with both hands. Learn it and learn it well. Plus the 50% retrace support down from the August highs to the June lows broke, meaning more selling coming. Usually that means a retest and usually breakage of the June lows.
Vito Tagliano
Vito Tagliano Sep 04, 2022 5:42PM ET
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In nutshell, Federal Reserve on course 0.75% Hike, Geo-Political is NOT good at all between U.S and China. Entire Month of September is Bearish YoY this time going be 🩸🩸only Bullish Sector is Energy Oil/Gas at this time.. in my humble opinion.
Buy And Sell
Buy And Sell Sep 04, 2022 5:34PM ET
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Huge crash around the corner. Sell all stocks now or go broke!
Dave Jones
Dave Jones Sep 04, 2022 5:17PM ET
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Means markets are going to rip higher.
JIM VETTER
JIM VETTER Sep 04, 2022 5:17PM ET
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uh, no
Ramesh Shah
Ramesh Shah Sep 04, 2022 5:12PM ET
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Sell in strength as earnings face higher bonds yields
Al Ose
Al Ose Sep 04, 2022 4:57PM ET
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Short squeeze Tuesday.
Casador Del Oso
Casador Del Oso Sep 04, 2022 4:47PM ET
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As Michael Burry tweeted "Winter Coming".
Mot Andes
Mot Andes Sep 04, 2022 4:34PM ET
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Joe Sixpack still massively in stocks. They will start selling soon. Bottem when 95% of the Joe's is gone. Around 1500.
Nick Roth
Nick Roth Sep 04, 2022 4:30PM ET
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Nobody cares about PMI when we're discussing war
 
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