Marketsforu Morning Markets

marketsforu

ASIA

Asia equity markets traded with significant losses amid increased growth concerns following last Friday’s weak PMI data from both China and US, coupled with commodities falling to fresh 6 year lows and US stocks in correction, sparked a further sell-off in the region. The ASX 200 (-3.4%) declined by the most in 4 years, Nikkei 225 (-3.9%) and Hang Seng (-4.7%) also saw considerable losses with energy dragging the index lower, while the Shanghai Comp. (-8.1%) was the worst performer as it pared all YTD gains, despite officials’ attempts to support the market by allowing pension funds to invest in stocks for the first time. 

The PBoC could possibly cut the RRR by 50bps before end of August or early September, according to sources. 

China’s pension fund is said to be permitted to invest in the nation’s stock market, however restricts the maximum proportion of investment in stocks and equities to 30% of total net assets. 

EUROPE

25 Greek parliamentary rebels from the Syriza party have formed a new party named Popular Unity which aims to challenge Tsipras at the upcoming election. (Capital.gr)

UK

David Smith of The Times writes that the recent stock market sell-off, together with the ongoing collapse in energy prices is set to put interest rate rise on hold by both the Fed and the BoE. (The Times)

CBI raised its 2015 UK GDP forecast to 2.6% from 2.4%, raised 2016 forecast to 2.8% from 2.5% and brought forward its BoE rate hike forecast to Q1 2016 from Q2. 
 
FX

USD remained under pressure as economic concerns push back the case for an early Fed rate lift off with EUR/USD a notable benefactor as the pair surged above 1.1400. Safe-haven JPY also strengthened considerably amid the risk-off tone while emerging market currencies are taking a hit amid China growth and EM outflow concerns.

COMMODITIES

WTI crude and Brent crude futures fell to their lowest levels since 2009 with WTI crude declining below USD 40/bbl and Brent under the USD 45/bbl amid the risk averse tone led by a collapse in global equity markets. Copper prices also fell to its lowest level in 6 years while iron futures in China traded limit down weighed by the China growth concerns. 

The Iranian Oil Minister has said they will raise production levels regardless of the cost in an attempt to defend market share, although admits that OPEC should hold an emergency meeting to help hold up prices. 

GEOPOLITICAL

North and South Korea began high-level discussions in the demilitarized zone in which both parties discussed means to resolve the recent tensions and develop relations.