Posted on: 05 January 2016, by: Pepperstone Support, category: Market Review
Tough start to the year as equities globally sold off sharply following a theme set during Asian trading as Chinese equities collapsed over 7% before triggering circuit breakers closing the market for the remainder of the session. Chinese PMI edged slightly lower to 48.2 vs 48.9 exp reinforcing the weak price action.
US and European equities caught the Asian bug as S&P and Dax sold off 1.5% and 4.3% respectively. This was the worst DJIA start to a year in US markets since 1932. Data was soft globally, German CPI came in at 0.2% v 0.4%, US PMI at 51.2 v 51.3 exp while construction spending came in at -0.4% vs an expected increase of 0.6%. Following the data, the Atlanta Fed slashed its GDP Now forecast nearly in half to 0.6%
Unsurprisingly risk aversion persisted across markets. USD was generally supported, with USDJPY of course being the exception as it printed a low of 118.70 before consolidating back above 119. Gold gained throughout European and early US trading up to 1283.41 before settling in around 1274.50
Crude also saw significant swings initially making gains up to 38.45 on the back of the Saudi-Iranian conflict headlines before collapsing back down to 36.50 as global growth concerns seem to take the front seat while traders try to digest the complexity of the situation in the middle east
USDCAD remained fairly bid despite the rally in WTI, printing a high close to 1.3985 as oil corrected lower later settling in at 1.3940.
AUD and NZD both were the worst performing G10 currencies falling 1.3% and 1.25% against the dollar respectively.