Equities up, oil up, gold up, risk currencies up - ASX futures up 38 points

Investor complacency is high at the moment - Europe is doing what it said it would do, the market has gotten used to the US Federal Reserve's intentional vagueness, and interest rate expectations in Australia are predicting increased money supply locally. Today's first chart (S&P 500 implied volatility, or VIX) is sitting just below a reading of 13, which you can see is historically low. It's not as low as it goes, but it tells us that investors are not expecting any big moves in US equity markets over the next month. I think that the market has gotten comfortable with the fact that the US Federal Reserve are a little divided on their thinking about the next rate rise and that--irrespective of whether a token hike in 2015 manifests or not--no surprise monetary policy trends will emerge. This can change - although VIX implies that it is somewhat forward-looking given that it extracts a volatility price signal attached to options premiums over the following 30 days, it historically gives very little warning of an up-tick, as you can see from its swift rises and gradual falls in the past. So what it really tells us is that investors (right now) are not fixated on macroeconomic event risks.

Today's second chart shows us that the ASX 200 (black line) has continued to hold onto its year-to-date out-performance of the S&P 500 (orange line). Both markets appear range-bound and have settled into the current policy status quo of their respective regions, meaning that Australia is comfortable with a bad upcoming budget in exchange for lower rates, and the US is comfortable with its economic recovery and the prospect/threat of marginally higher rates at some point.

Today's last chart shows a break-out on the WTI crude oil price (OILUS). Anyone following my advice to take the short view and range trade this instrument from previous mid-US$53 levels should be out of this trade at US$54.50; and given the price has now broken significantly above recent selling resistance, the price will need to now prove that it can turn its previous selling resistance into a buying support level, which will require a few sessions to pass in order to prove reliable.

On a lighter note, the finance industry can be a bit of a formal and structured world, so it's always nice to see someone mixing things up now and then - last night during ECB President Mario Draghi's press conference a young protester made an impressive leap up onto the conference desk and began to chant something or other. Check out The Guardian's coverage of it here: http://www.theguardian.com/world/2015/apr/15/ecb-protest-woman-interrupts-mario-draghi-speech. The desk looks to be around 80cm high and she had used her foresight to wear flat shoes with, presumably, some decent grip, which saw her execute the jump rather well. And what is she chanting? "An end to the salt and vinegar potato chip?" Surely not. No, no - I got it wrong. "End ECB dictatorship." Draghi took it pretty well and got on with things after a two-minute break.

Traders please note: Australia's employment report will be released at 11:30am today, Sydney time. The market is expecting a change of +15,000 jobs and an unemployment rate of 6.3%. Expect AUD and ASX volatility.


Today‚Äôs charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to open a Rivkin Trader account now.

Upcoming economic announcements: Australian CPI expectation out at 11am, Australian employment report out at 11:30am, US building permits, jobless claims and housing starts out at 10:30pm, all Sydney time.


This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice and dealing services on securities, derivatives and superannuation (SMSF). Rivkin also provide SMSF administration and accounting services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.