IG Markets: Notes on Australian markets today

The day's key takeaways:

- Quiet start to a week focused on geopolitics, US earnings, and macro data

- Price action mixed, as the market treads water ahead of event risks

The run down:

Not much has happened today to really rattle the coup. There’s plenty on in the week ahead to get excited about. But the market is behaving, generally, as if everyone has already placed their bets. Fireworks aren’t exactly expected out of this week’s events, that’s for sure. Implied volatility is low. And barring any unexpected events – like, say, the surprise assassination of one of the world’s most powerful military figures, or something of the like – that dynamic ought to remain. Of course, the focus of traders this week will be split between three themes. In order of significance: geopolitical – the US and China’s signing ceremony of a phase one trade-deal in Washington; corporate – the commencement of US earnings season; and macroeconomic – a spate of US and Chinese economic data. The market is priced in such a way that few surprises are expected out of these events. But naturally, that only means volatility will be all the higher if something unexpected were to occur.

Equities in the Asian region have traded rather mixed. The Nikkei has led the pack, and the Hang Seng has followed with modest gains. On the flip side, Chinese equities have pulled back somewhat. The ASX200 has been the region’s major laggard, as traders pocket their profits off the back of what was a very sentiment, and technical driven rally on Friday. The index is down below 6900 again now, however, that’s come on some pretty low activity. The momentum is still to the upside for Aussie stocks, even if market fundamentals look less than pretty. As far for the other movements in the market of immediate import, the Australian Dollar is up above 69 cents, mostly due to a slightly weaker USD, which dipped after Friday’s slightly disappoint US jobs report. Futures markets are pointing to a generally positive start to trade for US and European equities now, and look set to reclaim a margin of Friday evenings losses.