Asia Session: Stocks Rise As Gold Falls

Asia stocks rose ahead of U.S. employment data and Fed Chairman Jerome Powell’s speech later this evening. Gold continued its overnight collapse as investors reduced haven positioning en masse after renewed U.S.-China trade talks.

Equities

The announcement that both the U.S. and China would return to the negotiating table in October has seen a U-turn in the previously negative sentiment hanging over equity markets. The rally that was sparked yesterday in Asia has continued today, albeit in a more subdued manner.

Asian stock markets have recorded a good day though, ignoring the just released surprise fall in German manufacturing. The Shanghai Comp and CSI 300 have risen 0.45%, the Nikkei 225 0.40%, and the Hang Seng 0.47%. Earlier today the New Zealand NZX 50 hit record highs and the ASX 200 finished 0.47% higher. Regional markets across Asia have all recorded positive days.

Early European trading indicates a positive start with the German DAX 0.25% higher and the France CAC 40 0.10% higher. The UK FTSE is slightly lower by 0.10%, weighed down by the possibility of an imminent general election.

Heading into the crucial U.S. Non-Farm Payrolls data (158k exp), we expect the positive tone to continue, albeit at a gentler pace from yesterday. Only a massively lower NFP print would likely derail the rally into the weekend.

FX

Region currencies have rallied against the U.S. dollar as investors continued to rotate in more positive growth trade positioning from defensive positioning in dollars, Swiss francs and Japanese yen. The NZD/USD was 0.40% higher at 0.6400. USD/CNH dropped 0.25% to 7.1200, and the USD/INR fell 0.40% to 71.60.

Barring any unforeseen headlines or a U.S. data surprise, we would expect the upbeat tone to continue into the week’s end.

Gold

The gold collapse overnight continued at a gentler pace in Asia, with gold falling 0.55% or 9 dollars to $1512.50 an ounce, trading as low as $1505.50 during the session. Given the strength of the safe-haven driven rally of the last few months, it is no surprise that when the dam broke, there was a mass rush to the exit. Rising government bond yields also have undermind gold’s positive fundamentals.

Gold has initial support at $1505.50, the overnight and session low and now a double bottom. It is followed by psychological support at $1500.00 an ounce and then the critical long-term technical support at $1480.00. Resistance is at $1520.00, followed by $1534.00 an ounce.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst - Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia and the New York Times. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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