Profits from Chinese industrials soar with global markets following suit

Our XJO is expected to open around 30 points higher this morning, just below the key 7,600 level. This level is a fraction off the all-time high for our market, and it looks like we could record a new high in the coming days.

As economic data, traders, and market volumes return in the new year, we will need to watch for a potential turnaround from these highs.

Technically, our XJO is on an upwards movement and we will need to look for potential resistance at the all-time highs around 7,600-7,630. This level would have to break for further gains to look likely. Given the strength of the recent upwards move, profit taking and a higher trough should be expected at some point.

In currencies, The Australian dollar continued its upwards movement against the US dollar overnight, and its looking possible that we will reach 69 US cents, though a pullback doesn’t look too far off after recent strong gains.

US Markets

Equity markets closed higher overnight, with the Dow Jones up +0.3%, S&P 500 up +0.1% and NASDAQ gaining +0.2%. The New York Federal Reserve’s Corporate Bond Market Distress Index showed increased stress in December. Fed surveys across America show labor market cooldown in 2024 with employers expecting to hire less, limiting wage gains

Asian Markets

Asian equity markets closed higher overnight, with the Shanghai Composite up +0.5% and Hang Seng up +1.7%, as data revealed China’s industrial profits soared in November with profits jumping +29.5% y/y, helped by favorable year-ago comparisons, a raft of stimulus measures aimed at reinvigorating an economy that has struggled with deflationary concerns and large investment returns with further boosted bottom line.

KOSPI gained +0.4%.

Nikkei 225 gained +1.1%, as summary from BOJ’s December policy meeting revealed board members discussed the potential timing of the nation’s first interest rate hike since 2007 during their meeting, with several members indicating they see no rush to make the move.

BOJ gave itself more leeway to cut bond buying in coming months as upward pressure on yields subsided, with the bank setting lower limits for its purchases of government debt due in one to 10 years in its operations plan for 1Q24 compared with that for December while also reducing the frequency of buying for super-long tenors.

European Markets

European equity markets closed higher overnight, with both the Stoxx Europe 600 and German DAX up +0.2% and U.K. FTSE 100 gaining +0.4%.

WTI oil is trading at US$73.92 a barrel.

Iron ore price is at US$130.61 per ton. 

Spot gold is trading at US$2077 per oz.

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