China’s stock market down by 7%

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On Wednesday, UK’s Markit/CIPS services Purchasing Managers’ Index (PMI) revealed a stabilized growth in the country’s service sector falling marginally to 55.5 from November’s 55.9, still maintaining the survey’s long-run average of 55.2 – an indication of an overall increase. Overall, the whole economy is on a steep upward slope, backed up by the sharp rise in the new businesses figure, firms reporting a very high success rate of the marketing campaigns for the month of December.

In the US, Fed’s minutes about the December 2015-2016 policy meeting revealed a growing concern regarding the persistence of low inflation in the American economy. Although December’s rate hike was unanimously voted by all of the FOMC (Federal Open Market Committee) members, there were some amongst them who weren’t easily convinced and still consider it a hasty decision. These members expressed their concerns about a stronger confirmation of an actual rise in inflation, looking into 2016.

Looking at the AUD/USD, Thursday brought a loss in momentum for the short-term time frames, shutting down the bullish tone as Aussie latest data over building permits disappointed investors. The month-on-month building approvals in Australia for the month of November posted a 12.7% decay versus an expected 3.0% loss and 3.9% in October, the year-on-year readings for November reaching -8.4% versus an expected 3.9% and on October reading if 12.3%.

Canada’s dollar posted gains only on Thursday afternoon, after hitting new multi-years lows versus its American counterpart earlier in the session, with the USD/CAD spot bouncing in the 1.4125/20 area. The trend shifted upwards during the day due to BoC’s (Bank of Canada) Governor S. Poloz underlined that the consumer prices are only amplifying the trend of inflation, arguing that the low CAD is responsible for the high prices in imports.

[Tweet “Crude oil prices reached multi-year lows in the $32.00, closing yesterday’s session at $33.50”]

China’s stock market can deem yesterday as a day of serious turmoil, with Shanghai Comp. going down 7%. The bearish sentiment has been accumulating early in the Asian session, setting a mass sentiment of risk aversion and a sudden sell-off in the commodities and equities markets.

Crude oil prices also pulled back after setting new multi-year lows in the $32.00 per barrel area, closing yesterday’s session at around $33.50 per barrel. For the moment, the pressure on oil prices seems to have turned down, the WTI (West Texas Intermediate) barrel testing the support line at $32.00, but quickly turning back up in the early European session. The risks arising from the Chinese economy and the global supply glut are the main factors that are driving oil prices at the moment.


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