Asian markets are recovering their losses on the back of the better than expected report which came out in China. The Chinese trade balance data came in at 49.6B while the forecast was for the 48.9B. However, investors are still pretty much concerned about the drop in the crude oil price which has caused another sell off in the US markets yesterday.
When it comes to oil, it is still the same fundamentals, which are impacting the price. This means that both the supply and the demand side of the equation are not balanced. And unless, we do not get a blink by either parties – the U.S. and the Saudis, it is extremely difficult to think of a scenario under which the price can reverse its course. The WTI crude oil was crushed yesterday, when it dropped nearly by another 5%, because Goldman Sachs has slashed their target number. The US Crude Oil was closed at its lowest level in nearly 6 years along with Brent oil.
This caused a major sell off for the equity markets in the US as investors are more worried about the energy stock and the earning season kicking off. The major concern is that we will get a wave of debt default by these companies and hence there could be plenty of acquisition and mergers taking place, as this year will commence.
Back in Asia, the Nikkei 225 index is trading lower with a loss of -1.54%. The Hang Seng index ticked up with a gain of 0.53%, along with Shanghai index which is also trading higher with a gain of 0.26%. The Australia Index also cut its losses during the late afternoon session as the trade balance picture started to look better in China. Having said all that, energy sector is without any doubt is still the biggest lager. Mining sector is also doing well today as iron ore prices and small minor companies became the target of selling.
Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.