Crude oil falls again on fears of weaker demand from China and Japan
Crude oil has been slammed again to start the new week with WTI falling nearly 2.0% amid continued fears over falling demand while suppliers keep the taps open full blast while they fight over share in a shrinking market. Lower oil prices have also dragged on oil producing country currencies, particularly CAD, NOK and RUB.
Although the volatility from last week’s surprise twin currency devaluations in China has subsided, concerns remain about the health of its economy and demand for resources. A not as bad as feared but still poor Japanese GDP report has further stoked concerns about potentially lower demand for oil.
Although more moderate than last week, we’re still seeing outflows from risk markets toward defensive havens, with gold outperforming paper currencies on the day. Emerging market currencies remain under pressure, particularly the Taiwanese Dollar, Turkish Lira and Chilean Peso.
US indices and USD have gone into retreat after the Empire Manufacturing report came in well below expectations, reducing the pressure on the Fed to start raising interest rates (although it's a minor indicator and probably won’t stop them either). Overall, stock markets continue to be impacted by seasonal factors as we enter what has historically been the weakest time of the year for stocks.
European markets have been mixed this morning starting out higher on chatter about ways Greece’s debt burden could be eased and the IMF brought into the new bailout program. In the UK there has been talk about the potential timing of a Brexit referendum and interest rate liftoff.
Overall, although volatility related to many of the stories that have rocked the markets over the last several months has subsided a bit for now, the big issues haven’t gone away and could flare back up again any time, creating opportunities for trading.
There have been no major corporate announcements this morning.
Significant announcements released overnight include:
US Empire Manufacturing (14.90) vs street 4.50
Japan GDP (1.6%) vs street (1.8%)
Japan GDP inflator 1.6% vs street 2.1%
UK Rightmove house prices 6.4% vs previous 5.1%
Norway trade balance NOK 21.9B vs street NOK 23.1B
Eurozone trade balance €21.9B vs street €23.1B
Upcoming significant announcements include:
There are no major announcements scheduled for North America later today
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