Saturday 29 June 2019

Weekend update - World equity markets

It was a bullish month for world equity markets, with net monthly gains ranging from +7.3% (Russia), +7.2% (USA), +6.4% (France), +5.7% (Germany), +4.6% (Greece), +4.1% (Brazil), +3.3% (Japan), +3.2% (Australia), +2.8% (China), to +2.2% (Spain).

Lets take our regular look at ten of the world equity markets

USA - Dow

The mighty Dow climbed 1784pts (7.2%) to 26599. The intra month high of 26907 was just 44pts shy of the Oct'2018 historic high. The June settlement was a decisive 1000pts above the key 10MA (25529), and thus negates the bearish May settlement.

Underlying macd (green bar histogram) cycle ticked upward, although price momentum does remain moderately negative. Note the RSI divergence, which remains broadly intact.

A bullish month, quarter, and first half of the year for the Dow and other US indexes, but broadly stuck since early 2018.

Germany – DAX

The economic powerhouse of the EU - Germany, saw the DAX settle +671pts (5.7%) to 12398, the highest monthly settlement since July 2018. Price momentum continues to tick back upward, and is set to turn positive with the July 1st open.

The German economy is clearly struggling, borderline recession, as reflected in the German 10yr bund, which printed -0.3% this June. With rates set to remain repressed all the way into mid 2020, the pressure will continue on the German/EU financials, not least the ticking derivatives time bomb of Deutsche Bank. Whilst there is chatter of the garbage being excised to a 'bad bank', for now... that's all it is... chatter.

Japan – Nikkei

The Nikkei settled +674pts (3.3%) to 21275, and whilst this was back above key price threshold of 21k, this was still under the key 10MA. Monthly price momentum remains significantly negative, with a monstrous technical divergence that stretches back to mid 2015. The Japanese bulls need >23k to be confident, whilst the bears should be seeking a break under the Dec'2018 low of 18948.

China – Shanghai comp'

The Chinese market settled +80pts (2.8%) to 2978. Note the spike floor from around the key 10MA. Whilst price momentum is fractionally net positive, the China bulls need to see a break above the April high of 3288, to have confidence for the second half of the year.

Brazil – Bovespa

The Brazilian market climbed 3936pts (4.1%) to 100967, having broken a new historic high of 102617. Note the black macd line at 8336, at levels even above the 2008 highs. Only bearish if a monthly settlement under the 10MA.

Russia - RTSI

The Russian market climbed for a fourth consecutive month, settling +93pts (7.3%) to 1380, the highest monthly close since Dec'2013. No resistance until around 1500, with secondary of 1600.

France – CAC

French equities gained 331pts (6.4%) to 5538. The June settlement is around a very key price  threshold, and the situation is indeed 'borderline'. A break >5700s would be decisive, whilst the bears need to settle back under the key 10MA in the 5200s.

Spain – IBEX

The IBEX gained 194pts (2.2%) to 9198. Price momentum remains fractionally negative. The Spanish bulls need a decisive break >10k, whilst the bears need to take out the Dec'2018 low of 8286.

Australia – AORD

Australian equities climbed for a sixth consecutive month, settling +207pts (3.2%) to 6699. The Nov'2007 historic high is just another 174pts (2.6%) to the upside. Higher commodity prices would help, and a cooler USD would aid that.

Greece - Athex

Greek equities climbed for a sixth consecutive month, settling +38pts (4.6%) to 868, the highest monthly settlement since Jan'2018. A break >900s would offer the 1200s.


All ten of the world equity markets saw net June gains.

Russia and the USA lead the way higher, whilst China and Spain lagged.

The Brazilian market broke a new historic high. 

Of the ten markets, nine are above their respective monthly 10MA, the exception being Japan.

Looking ahead

It will be a short 3.5 day trading week.

Earnings: none of any importance.

M - PMI/ISM manu', construction
T -
W - ADP jobs, intl' trade, weekly jobs, PMI/ISM serv', factory orders, EIA Pet'

T - CLOSED (Independence Day)
F - Monthly jobs.

Final note

Whilst June ended on a positive note, there are clearly many issues out there, not least the ongoing trade/tariff drama between the US and China. As of Saturday afternoon, it appears Trump has partly conceded to the Chinese, but broadly... the uncertainty remains.

We have the bond market continuing to sound alarm bells, as we are seeing increasingly weak econ-data, such as Friday's Chicago PMI, which was an outright recessionary 49.7%.

The fed are clearly set for rate cut'1 of -25bps to 2.00/2.25% this July 31st, and I'd guess they will bring forward the end date for QT from Sept' to end July. Again, whilst the mainstream cheerleaders will naturally see such a rate cut as bullish, that really shouldn't be the case.

With the econ-data and earnings set to deteriorate in Q3, how long until Cramer et al start crying for Powell (or his likely successor - Bullard) to spin up the printers?

In any case, we're half way through the year, but the really bizarre thought... the 2020s aren't far away now! Where are the self-driving flying cars, replicators, or sentient computers?

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Have a good weekend
*the next post on this page will likely appear 6pm EDT on Monday.