IG | Jan 21, 2016 06:07AM ET
The turnaround mid-session in the S&P 500 overnight seems to have coincided with some stabilisation in markets globally. Asian markets tentatively pushed into positive territory today, but it is hard to escape the feeling that this is just pause on the way down. The Shanghai Composite opened down, but after a few hours of trade had joined other markets in the green (red for them). Although late in the session sentiment did seem to be cooling as the Nikkei 225 briefly dipped into negative territory and the yen began to push back toward the 116 handle.
The People’s Bank of China has also been keen to emphasise that management of the CNY would now be in reference to a basket of currencies rather than exclusively to the US dollar. While the CNY has depreciated 6% since the start of August 2015, the CNY basket has only depreciated 4.9%.
Aussie data today will only have fueled speculation that the RBA may be forced into another rate cut in 2016. If you didn’t realise the steam was coming out of the local housing market already, today’s HIA new-home sales data made it painfully clear. New home sales saw their third month-on-month decline in a row in November, but the drop was even starker in year-on-year terms, which saw new home sales decline by 5.2%. If history is any guide, get set to see new home sales decline by 20% or more by February 2016.
The ANZ job ads data for December further supports the ABS data showing a moderation in job growth in December. Job ads grew at only 0.4% in year-on-year terms, their slowest level seen since July. China concerns were the primary driver for the selloff in the Aussie dollar in January, but this deterioration we are seeing in the Aussie economic data are likely to restrain any major bounces in the currency even if we do see volatility declining in the markets.
Ahead of the European open we are calling the:
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