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Market View

Equities Sell-Off From China to Europe

Monday, August 24, 2015 10:00 AM GMT

 

- China's shares wiped out all of this year's gains and the US Treasury 10 year yield has fallen below 2% at 1.99%. (Source: Yahoo!Finance)

- Asian stocks dived to 3-year lows on Monday as a rout in Chinese equities gathered pace, hastening an exodus from riskier assets as fears of a China-led global economic slowdown roiled world markets. Safe-haven government bonds and the yen rallied on the widespread unrest in the financial markets, set in motion nearly two weeks ago when China sharply devalued the Yuan and stoked concerns about the state of its economy. Copper, seen as a barometer of global demand, tumbled to 6-1/2-year lows as the anxiety over China sapped investor confidence. Bourses from Japan to Malaysia were hit hard as Chinese stocks plummeted immediately after Beijing offered no big policy move at the weekend to support equities, as was widely expected after last week's 11 percent plunge. (Source: Reuters)

- RBNZ's Spencer: ''Property Investor loans will have higher risk weight, requires new asset class for property investors. Low interest rates contribute to housing demand pressure...Interest rates off the table for some time, Macro prudential policy can help moderate risks.'' (Source: RBNZ)

-Greek Prime Minister resignation is credit positive for sovereign (Source: Moodys)

- USD, EUR: Outlooks For The Coming Week by Morgan Stanley. USD Strong against EM. Bullish. With the Fed minutes leaving the option of a September rate hike open, the USD will be extremely data sensitive. Weak global demand is likely to continue weighing on manufacturing figures. Slightly lower-than-expected July CPI figures support our economists’ view of a December rate hike. With the rate hike having negative second-round effects on EM, we remain bullish on the USD against EM and commodity currencies. EUR: A Good Time to be a Funder. Bullish. We believe EUR is likely to outperform over the next few weeks. The risk-off environment is likely to drive repatriation flows, which could be EUR supportive. In addition, many risky holdings were funded in EUR, and the unwind of these positions should support EUR. With EUR not being used as founder in the near term, it should receive support from its current account surplus. (Source: Reuters)

- AUD/JPY is currently trading at 88.20 with a high of 89.19 and a low of 88.00. AUD/JPY is relishing in risk-off mood to start the week in illiquid early Asia, squeezing out shorts before they have even got to their desks. The Yen has been picking up the pace across the board with a poor performance on global equities and on the concerns of the implications in a pre-emptive PBoC and Chinese government who have taken bold measures to spur growth in the economy. The news from the weekend see's that China plans to let its main state pension fund invest in the stock market for the first time to attempt to prevent continue slides... (Source: FXStreet)

- Iran's Oil Minister, Bijan Zanganeh, said on Sunday that holding an emergency OPEC meeting may be "effective" in stabilizing the oil price, Iran's oil ministry news agency Shana reported. Algeria said earlier this month that the Organization of Petroleum Exporting Countries could hold an emergency meeting to discuss the drop in oil prices but other OPEC delegates said no meeting was planned. "Iran endorses an emergency OPEC meeting and would not disagree with it," Zanganeh told reporters in Tehran, according to Shana. (Source: Reuters)

- This week’s upcoming event: USD Consumer Confidence 25/8, USD Durable Goods 8/26, USD Core PCE 8/27 , JPY National CPI 8/27,  GBP GDP 8/28.

- Today’s Upcoming Events: Chicago Fed National Activity Index, Crude Price, 10- US Treasury Yield.

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