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Markets Started With Risk Aversion But Stabilized

Published 01/11/2016, 03:48 AM
Updated 03/09/2019, 08:30 AM
SSE
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Risk aversion extended to this week's Asian session with MSCI Asia-Pacific ex-Japan index dropped -1.8% to the lowest level since 2011. Selloff in Chinese stocks resumed with the SSE (L:SSE) composite losing another -5.3%, or -169.7 pts, to close slightly above 3000 handle at 3016.7. Hong Kong HSI also lost -2.76%, or -565 pts. Nonetheless, sentiments seemed to have stabilized in early European session as major European indices opened mixed only, with FTSE and DAX having mild losses. In the currency markets, while yen surged earlier today, it's reversed earlier gains and is trading below Friday's close for the moment. Commodity currencies also recovered from initial losses.

In China, the president of State Council's Development Research Centre said that tis' very difficult to achieve 6.5% growth in the coming years between 2016-2020. The due to slowdown in global economies, rising labor costs in China and growing environmental concerns. Released over the weekend, headline CPI in the world's second largest economy rose to 1.6% yoy in December from 1.5% a month ago. However, PPI deflation stayed at -5.9%, marking a 46th consecutive month of decline. A Fed-style Beige Book for China last month suggested that "for the first time, it looked like firms were encountering genuinely harmful deflation".

Elsewhere, New Zealand building permits rose 1.8% mom in November. Swiss retail sales dropped -2.1% yoy in November. Eurozone will release Sentix Investor confidence today while Canada will release housing starts. For the week ahead, the focus should stay in China with December's trade data due Wednesday and monetary aggregate report later in the week. The BOE meeting would he held Thursday but no change in the monetary policy is expected. The ECB minutes would be released on the same day. In the US, the focus should be on retail sales, industrial production and Michigan consumer confidences.

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