Asia Session Close: RBA , India and Gold

The Reserve Bank of Australia pushed rates to a record low today, cutting 25bps to 0.75% with a dovish bias. With the domestic economy continuing to wane and the Federal Government showing no signs of fiscal expansion, the RBA was left with little room to manoeuvre as wage growth stagnates and consumers desert the shops.

The rate cut gave a boost to Australian shares with the ASX 200 climbing 0.80% to 6,743 after a slow start this morning. Lower rates weren’t so kind to the currency, the AUD falling 0.80% or points to 0.6700 this afternoon. Daily support remains intact, just, between 0.6670 and 0.6680. A break would mark out a new 10-year low and potentially implies a much larger move lower, possibly as far as 0.6200, could occur over the next few months.

Gold continued to be punished following its poor overnight session, falling another 0.55% to $1264.00 an ounce in Asian trading. With stock markets and the U.S. dollar performing well, and with no Mainland or Hong Kong buyers to support it, gold wilted as more stop-loss selling hit the street. The next critical technical support zone lies at the $1550.00/1553.00 an ounce region.

With China and Hong Kong closed for the week, regional markets elsewhere traded positively following Wall Streets lead and on improving trade wart hopes. The Nikkei 225 rose 0.90% to 21,943, the South Korean Kospi rose 0.40% to 2071, and the Singapore Straits Times rose 0.75% to 3143.

India’s stock markets have taken a sudden turn for the worse this afternoon with the Nifty 50 turning from positive initially, to plunge over 1.70% to 11,284. Yes Bank is lower by 22% on the session with that and other financials leading the sell-off.

The Nifty 50 has now retraced entirely, its powerful 10% rally, as worries persist about the health of the India banking system and a potential credit crunch. Exacerbating the moves could be the public holiday in India tomorrow for Gandhi’s Birthday.

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