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Price action in Chinese equities and futures markets will be in focus today with the National Audit Office (NAO) releasing the findings around the levels of local (and total) government debt. It’s hard to predict the price action in the market, especially as the pace around the build-up of debt has increased fairly rapidly, but with the Chinese markets trading on such low earnings multiples I feel the market has priced in a pretty lofty number. Perhaps the certainty could see traders put on more bullish trades, however this story is certainly getting the attention on the floor today.
The pair found solid buying from around 17:30 AEDT yesterday, driving the pair back above 0.8900. The bulls would certainly have hoped for a daily close above 0.8929 (yesterday’s high) and thus printing a bullish engulfing candle. At 11:30 AEDT today we get the November read of private sector credit and traders are looking for a gain of 0.4% on the month (+3.9% year-on-year). Given the thin liquidity we could see a more exaggerated move today, with traders looking at downtrend resistance drawn from the October high at 0.9003.
The Australian market looks set to close the year with a 15% gain and its worth bearing in mind the cash market closes at 14:00, with the usual ten minute post market auction. Volumes will naturally be very light today and direction could be taken from the Chinese market, given traders will be reacting to the audit results around local government debt.
Forge Group (FGE)
It’s been sometime since there has been volatility like we saw yesterday in Forge Group, with the stock trading between A$1.06 and A$1.96. Our client base are clearly favouring upside from here, with 82% of open positions currently long.