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Markets Update

 

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Markets Quiet as a New Week Starts, Oil Extends Slide

Asian markets are generally lower as another week started but loss is limited. The MSCI Asia ex-Japan index dropped to the lowest level since October 2011. Meanwhile, Nikkei is down more than -1.1%. But no follow through selling is seen, partly because stabilization in Chinese stocks, which are sitting near to last year’s low. The major move is found in crude oil, which drops to as low as 28.36 today, the lowest level since 2003. But reactions in other markets are muted so far. The currency markets are staying in Friday’s range without much movement.

Brent oil slipped to as low as USD 27.67 a barrel, the lowest since November, 2003, before paring back to USD 28.20, as it extended decline after the international sanctions on Iran were lifted. Iran is beginning efforts to boost output and exports by 500,000 barrels a day now that restrictions have been lifted, Amir Hossein Zamaninia, deputy oil minister for commerce and international affairs, said on Sunday. Saudi Oil Minister Ali al-Naimi stated crude prices would rise; he forecasts the market forces and cooperation among producing nations will lead in time to renewed stability.

Japan : BoJ governor Haruhiko Kuroda said today that the economy was still likely to continue recovering moderately. But “the BOJ will make necessary policy adjustments with an eye on upside and downside risks to the economy and prices.”

Elsewhere, UK  house prices rose 0.5% mom in January. Australia TD securities inflation rose 0.2% mom in December. The European calendar is empty today while US will be on bank holiday. Trading could remain subdued for the rest for the day.

The focus of the week should be the latest set of Chinese macroeconomic data due Tuesday. Just 19 days after the fourth quarter ended, China will release figures showing how its economy performed. Such speed is one reason behind skepticism about how well China’s economic reports inform the financial world

GDP probably steadied at 6.9% c in 4Q15. IP growth probably eased to 6.1% in December from 6.2% a month ago. Retail sales might have expanded 11.3%, up from 11.2% in November.

EUROPE

European Shares Turn Lower; Energy Prices Drop on Iran Exports

European shares failed to cling on to an initial gain, falling to their lowest in more than a year, and Asian stocks declined as crude oil sank to a 12-year low on the lifting of sanctions against Iran.

Banks led the declines in Europe, with oil and gas stocks also lower before the Organization of Petroleum Exporting Countries releases its monthly oil-market report.

Polish bonds fell after the country received its first-ever sovereign downgrade.S&P downgraded Poland Sovereign to BBB

The Stoxx Europe 600 index fell 0.4 percent by 9:58 a.m. in London, while Brent crude futures dropped 0.4 percent to $28.84 a barrel.

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