China’s PPI produced its lowest reading since August 2016 this morning, with the August YoY falling 0.80%.
With a lot of anticipated easing in China already priced in, and with no lead from Wall Street as such overnight, China and Australian markets finished the morning in the red. Currencies were broadly unchanged with one bright spot being oil, which shrugged of profit-taking to continue its march higher.
China’s CSI 300 and Shanghai Comp fell 0.50% and 0.35% respectively, with Hong Kong’s Hang Seng index flat, as this morning’s PPI weighed heavily. China sensitive Australian equities also fell, compounded by a feeble NAB Business Confidence reading.
The ASX 200 fell 0.75%.The picture was brighter around Asia though, with impending easings by the Federal Reserve and ECB supporting prices. The Singapore STI was higher by 0.40%, the South Korea KOSPI by 0.55% and the Nikkei 225 by 0.35%.
Early European futures trading points to a slightly weaker opening this afternoon.
Currency markets hung tight today, preferring to keep their cards close to their chest ahead of the European open. USD/CNH spiked lower to 7.1060 after the China PPI release but recovered those losses to be unchanged at 7.1140.
The trade-sensitive Australian dollar (AUD) also fell to 0.6850 as Australian stocks fell post the business confidence release. It too has recovered to unchanged as monetary easing outweighs for domestic data for now. The AUD has rallied from 0.6700 over the past week but now faces technical resistance at 0.6900.
Both Brent crude and WTI have shrugged of initial profit-taking sellers to post modest gains at $63.20 and $58.10 respectively. Apart from central bank stimulus, oil has been supported by comments from the new Saudi oil minister.
He intends to work with OPEC+ to keep supplies tight and lift prices.Further support may come from this evening’s U.S. API Crude Inventory data if it shows a continuing drawdown in crude and gasoline stocks.
Gold has fallen a further 10 dollars to $1490.00 an ounce during the Asia session. Stop-loss selling, as it eased through $1500.00 an ounce this morning, contributed to a negative session as long positioning is reduced in a more favourable risk environment.
Gold has technical support at $1480.00 an ounce. A daily close below this level indicating a deeper technical correction to around $1450.00 an ounce is possible.