Morning Report Thursday 2 July 2015
Over the last few days, the local market has been swinging in 100 point ranges. This level of volatility is far from normal and should be taken as a warning signal of potential issues to follow – see chart 1. If we compare the volatility demonstrated in other equity markets around the world, we have been fairly quiet, only currently being 8% below our 2015 highs, compared to China, having fallen 21.7% and the German DAX 9.8%. Markets have now relaxed around Greece, even though a “No Vote” remains a strong possibility in the coming weekend. Our expectation at MarketMatters is for the ASX200 to experience an ongoing choppy price action, over coming months, with an ultimate target on the downside, around 5,200. The current downtrend illustrated in chart 1 may continue, i.e. sell bounces of ~200 points and buy fresh lows ~1% below previous. We anticipate that when/if the US market corrects, the Australian market will probably outperform.
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