Global markets extend losses on oil concerns

Equities tapered off in the US and tracked weakness seen in Asian and European trade. Turmoil in the energy space continued to cloud positive developments on the US economic data front.

Source: Bloomberg

Oil concerns have now switched from the supply side to the demand side, with falling demand triggering global growth concerns. Additionally, investors are also looking ahead to the Fed meeting, which will be accompanied by projections and is likely to bring a pivotal shift in tone. On the data front, industrial production surged 1.3% (much better than 0.8% expected) while the Empire State manufacturing index fell short. Regardless, the USD never quite found its footing and remains relatively subdued.

AUD could continue to drift

AUD/USD is just holding on to support a smidge above the $0.8200 mark. The pair is in for a busy day with the RBA’s monetary policy meeting minutes due out at 11.30am AEDT. RBA Assistant Governor Guy Debelle speaks at a banking and finance conference in Sydney at 11.15am AEDT.

Recent comments have suggested the RBA remains concerned about the high AUD and perhaps we’ll hear more around that. There probably won’t be anything fresh in the minutes given RBA Governor Glen Stevens had a detailed interview in the Australian Financial Review recently.

We also have China’s HSBC flash manufacturing PMI due out at 12.45pm AEDT, which is expected to come in contractionary territory at 49.8. Data from China will be very interesting in coming months, particularly after the People's Bank of China’s chief economist Ma Jun downgraded 2015 growth to 7.1%, citing the Fed’s actions as a key reason.

Should the Reserve Bank of Australia jawbone further and China data misses, we could potentially see AUD/USD finally break through the $0.8200 and trade at fresh lows since 2010.

ASX 200 remains under pressure

Ahead of the open we are calling the ASX 200 down 1% at 5140. This essentially sees us give up all the ground recovered from yesterday’s lows. In October, we traded as low as 5122 and I still feel we are likely to test that level in the near term.

Once again, moves in commodities will dictate price action for the materials and energy names. The drop in crude oil will cause further headache for the energy plays. As far as iron ore is concerned, as long as the commodity is below $70/t, investor confidence will be an issue for the iron ore plays.

National Australia Bank will also be one to watch after announcing the sale of part of its UK commercial real estate loans. The reduced exposure to high risk loans could give its shares a kicker today.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.