Michael McCarthy, Head of Dealing, Asia Pacific at City Index sent out the following message to clientele this morning:

The recent sell off in global markets was broadly related to a “de-risking” by investors – that is, investors had bought riskier assets in anticipation of a sharp economic recovery, and when the recovery turned out to be patchier than expected, the investors sold out of those risk assets. Both the AUD/USD and Australia 200 Sep10 are in the risk assets category.

With concerns about European debt levels and Chinese economic growth dying down, international investors appear to be more comfortable buying risk assets. These recent events are illustrated on the AUD/USD CFD chart from our platform (below).

This directly contrasts with the experience in the Australia 200 Sep 10 CFD. While it appears to have found a base at 4163, it has not yet moved up in the same way the AUD/USD has. Look for the Australia 200 CFD to play catch up.

The above view has been communicated to City Index clients first. All copyright City Index. All investors should note: Trading involves risk. The material provided here is for general information purposes only, and does not take into account your personal financial circumstances or need.

McCarthy, along with other market commentators and investment specialists, shares his views with readers and subscribers at FNArena on irregular basis. The views are his and not FNArena's (see our disclaimer).

www.Cityindex.com.au

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