Global Markets Overview – December 16, 2014
Global markets extend losses on oil concerns
Equities tapered off in the US and tracked weakness seen in Asian and European trade. Turmoil in the energy space continued to cloud positive developments on the US economic data front.
Oil concerns have now switched from the supply side to the demand side, with falling demand triggering global growth concerns. Additionally, investors are also looking ahead to the Fed meeting, which will be accompanied by projections and is likely to bring a pivotal shift in tone. On the data front, industrial production surged 1.3% (much better than 0.8% expected) while the Empire State manufacturing index fell short. Regardless, the USD never quite found its footing and remains relatively subdued.
AUD could continue to drift
AUD/USD is just holding on to support a smidge above the $0.8200 mark. The pair is in for a busy day with the RBA's monetary policy meeting minutes due out at 11.30am AEDT. RBA Assistant Governor Guy Debelle speaks at a banking and finance conference in Sydney at 11.15am AEDT.
Recent comments have suggested the RBA remains concerned about the high AUD and perhaps we'll hear more around that. There probably won't be anything fresh in the minutes given RBA Governor Glen Stevens had a detailed interview in the Australian Financial Review recently.
We also have China's HSBC flash manufacturing PMI due out at 12.45pm AEDT, which is expected to come in contractionary territory at 49.8. Data from China will be very interesting in coming months, particularly after the People's Bank of China's chief economist Ma Jun downgraded 2015 growth to 7.1%, citing the Fed's actions as a key reason.
Should the Reserve Bank of Australia jawbone further and China data misses, we could potentially see AUD/USD finally break through the $0.8200 and trade at fresh lows since 2010.
ASX 200 remains under pressure
Ahead of the open we are calling the ASX 200 down 1% at 5140. This essentially sees us give up all the ground recovered from yesterday's lows. In October, we traded as low as 5122 and I still feel we are likely to test that level in the near term.
Once again, moves in commodities will dictate price action for the materials and energy names. The drop in crude oil will cause further headache for the energy plays. As far as iron ore is concerned, as long as the commodity is below $70/t, investor confidence will be an issue for the iron ore plays.
National Australia Bank will also be one to watch after announcing the sale of part of its UK commercial real estate loans. The reduced exposure to high risk loans could give its shares a kicker today.
Asian markets opening call | Price at 8:00am AEDT | Change from the Offical market close | Percentage Change |
Australia 200 cash (ASX 200) | 5,138.40 | -48 | -0.92% |
Japan 225 (Nikkei) | 16,685.00 | -414 | -2.42% |
Hong Kong HS 50 cash (Hang Seng) | 22,706.20 | -322 | -1.40% |
China H-shares cash | 11,063.60 | -149 | -1.33% |
Singapore Blue Chip cash (MSCI Singapore) | 370.83 | -3 | -0.68% |
US and Europe Market Calls | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
WALL STREET (cash) (Dow) | 17,190.90 | -127 | -0.74% |
US 500 (cash) (S&P) | 1,989.30 | -16 | -0.83% |
UK FTSE (cash) | 6,178.00 | -72 | -1.09% |
German DAX (cash) | 9,340.30 | -217 | -2.27% |
Futures Markets | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
Dow Jones Futures (December) | 17,192.50 | -129.00 | -0.74% |
S&P Futures (December) | 1,988.88 | -17.00 | -0.85% |
ASX SPI Futures (December) | 5,096.00 | -34.00 | -0.66% |
NKY 225 Futures (December) | 16,800.00 | -407.00 | -2.37% |
Key inputs for the upcoming Australian trading session (Change are from 16:00 AEDT) | Price at 8:00am AEDT | Change Since Australian Market Close | Percentage Change |
AUD/USD | $0.8213 | -0.0011 | -0.12% |
USD/JPY | ¥117.810 | -0.895 | -0.75% |
Rio Tinto Plc (London) | £26.56 | -0.27 | -1.01% |
BHP Billiton Plc (London) | £13.75 | 0.50 | 3.77% |
BHP Billiton Ltd. ADR (US) (AUD) | $27.49 | -1.04 | -3.66% |
Gold (spot) | $1,193.25 | -23.35 | -1.92% |
Brent Crude (January) | $60.48 | -1.58 | -2.55% |
Aluminium (London) | 1927 | -14.50 | -0.75% |
Copper (London) | 6370 | -120.00 | -1.85% |
Nickel (London) | 16405 | -195.00 | -1.17% |
Zinc (London) | 2174.25 | -18.00 | -0.82% |
Iron Ore (62%Fe Qingdao) | $69.06 | 0.07 | 0.10% |
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