Sunset Strip > Trading Day Wrap From Blue Ocean 20170905

Mathan Somasundaram

Local market fell on the open with NK risk and then recovered to close flat with geopolitical uncertainty running wild. US markets will open tonight and play catch up. US administration is going to be calling global leaders tomorrow about NK and risk weighted response is for more sanctions and nothing much more. Any pre-empted strike would be taken badly by the market. Similar to any strike by NK that will force the hand of US. Apart from the geopolitics, the big macro for the week is central banks again. RBA delivered nothing as expected. The cooling property market, weak consumer sentiment with, historically high household debt with historically low interest rate shows that RBA will sit on the sidelines as long as they can till inflation forces them to raise rates. Then BOC meeting and US Fed beige book on Wednesday and ECB on Thursday. Canada is on recovery path and BOC will play it slow while US Fed needs to deal with patchy data. ECB may talk down the EUR strength as data improves. US Fed meeting in two weeks is the main market mover for September. Base metals and Precious metals are on fire again...lead by Copper and Gold. We like RRL and DCN in Gold, MLX and MOD in Copper, WSA and IGO in Nickel, AWC on aluminium and S32 as the diversified outside BHP and RIO. AUDUSD back above mid 79 cents and looking to go higher as commodities hold up on positive China outlook. US market will play catch up tonight with North Korean risk…futures are negative…that will weigh on our sentiment today. We continue to favour miners over financials and industrials for September. Stay nimble as September outlook remains weak for markets before the next leg higher.

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NO SUNSET STRIP TOMORROW…BACK THURSDAY!!!


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