The big news in the financial markets last week is the continuing slide of the markets in China and the impact of the global markets as a result. Shanghai Composite which triggered a sell off in the first week of 2016 fell further to close at 3186 down from 3578 in late December. The sell off was sparked by concern of a slowdown in China and markets bracing for a confirmation of the weak manufacturing data to be released soon. The Chinese sell off sparked a global sell off with the the Dow Jones industrial average falling from 17200 in late December closing at 16346 at the end of trading last week. Investors pulled nearly USD 9 billion from the Equity Funds in a run to safety to cut further losses. Bonds rallied as a result with the US 10y and the Aussie 10y bond rates falling.
AUSSIE DOLLAR FALLS BELOW 70 US CENTS
Weak Chinese sentiments and the fall of the stock markets have impacted on the Australian Dollar. The AUD considered to be the proxy for Asian markets fell sharply and broke through the US 70 cent barrier and is currently (11/1) trading at 69.46 US cents. This trend is reflected in cross currencies as well with the Aussie declining in value against most major currencies.
oil price falls amidst middle east concerns
The other major news of the week was the further collapse of crude prices with Brent Crude down to 32.93 USD per barrel. The instability in the Middle East with Iran upset on the news of execution of a Shia cleric in Saudi Arabia may result in discontent within OPEC when Iran joins the group after the sanctions against them are lifted in 2016. There is a concern within the markets that OPEC will not be able to strike a uniform price and volume position.
MARKET UPDATE FOR THE WEEK
| Australia Cash rate Australia 90 d bank bill (mid) Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Shanghai Composite Brent Crude(USD per BBL) Gold Spot (USD per oz) | 8 JAN 2016 2.00 2.318 2.77 2.12 0.7061 0.6492 83.57 4.6528 4902 1922 16346 3186 32.93 1106.98 | 30 DEC 2015 2.00 2.375 2.88 2.28 0.7306 0.6682 87.98 4.7442 5311 2044 17425 3539 38.31 1062.77 |
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