The Australasian market has walked into another sea of red in the equity markets this morning as the moves this earlier this week now appear to be the start of a reversal rather than a slight blip. The Dow closed the US session down 4.15% and the S&P 500 wasn’t far behind at -3.75%. The futures market has a tough start to the day priced in for both the ASX 200 (exp – 131) and the Nikkei (-650). The currency markets weren’t hit as hard as they were earlier in the week but the ‘risk off’ pairs are under a lot of pressure as we open the Asian session with the JPY crosses looking vulnerable across the board.
The main risk event of the day yesterday was definitely the Bank of England rate meeting and they did not disappoint the market, we got the expected ‘no change’ but there was a change in message from the MPC as they indicated that recent data has moved forward their plans for their next rate hike. The sterling reacted accordingly and raced to the topside and the market now has a May hike priced in at nearly 75%. We also heard from RBA Governor Lowe last night and he’s singing from a different hymn sheet to his contemporaries in London as he advised that the RBA see’s no rush for an imminent rate hike. This had put further pressure on the Aussie dollar both against the greenback and on the crosses.
Looking ahead to today and once again all eyes will be on the world’s stock markets as we move through the trading cycle. We do have some key risk events due the course of the day with the RBA Monetary Policy Statement due at 11.30 am here in Sydney. Later in the Asian session we have both the CPI and PPI data out of China due for release and into the London session, sterling once again will be in focus as the UK Manufacturing Production numbers come out. It’s relatively quiet in terms of US data tonight but we do have the Canadian employment figures out to add a bit of spice – to an already pretty hot New York session.
Once again we expect the move in the equity markets to dominate the markets and the news wires today and these will be the main focus for traders as we move into the weekend.