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Micro contradicts macro

Traders and investors braved another see-sawing overnight trading session as global factors conflicted with individual company reports. The US Congress failed to unlock government spending, extending the government shutdown into its 34th day, while conflicting comments from officials turned up trade tensions. In direct contrast corporate reporting was on balance positive and chipmakers as a group lifted 6%. Profitability across the 108 top 500 companies that have reported is up around 14%.

Surprisingly US PMIs showed an acceleration in both services and manufacturing during January, one of the few macro indicators to defy the current gloom.

Market action was therefore choppy and mixed. Oil and industrial metals found support, and precious metals dropped, largely on the back of a stronger US dollar. However bonds also found support. Once again major stock indices traded both red and green over the session before closing mostly higher.

In yet another contradiction commodity currencies came under pressure. The AUD slipped below 71 US cents, and the NZD dropped a half cent after failing at the 68 cent level.

Asia Pacific futures markets are signalling a positive start to today’s session. The release of Japanese CPI data will garner higher attention after the Bank of Japan cut its inflation forecast earlier this week. Singapore investors will watch Jardine Matheson shares after yesterday’s 83% plunge and rally back. In Australian volumes will be boosted by the expiry of exchange traded options, with $1.5 billion in stock changing hands on exercise and the cash settlement of $165 billion in index derivatives.

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