USD Broadly Higher, Global Equities In The Red

 | Jan 14, 2016 07:18AM ET

Market Brief

After an encouraging start to the day, US equity markets quickly turned negative on lingering risk-off sentiment. The S&P 500 fell 2.50%, the Dow Jones 30 was down 2.21%, while the NASDAQ plummeted 3.41%. In Canada, the S&P/TSX Composite was down 1.64% as the crude oil rout resumed with West Texas Intermediate hitting $29.93 in the late European session yesterday, a fresh 13-year low. The Brent crude tested $29.73 earlier this morning as the Brent/WTI spread reached -0.70 cents.

In Asia, regional equity markets were trading in negative territory with the exception of mainland China; both the Shanghai and Shenzhen were blinking green, up 1.97% and 3.81% respectively. The People’s Bank of China set the USD/CNY fix at 6.5616, down 0.14% compared to yesterday. Elsewhere, in Hong Kong the Hang Seng was down 0.32%, while in South Korea the Kospi edged down 0.85%. Finally, the Thai BGK fell 0.93%, in Indonesia the JCI dropped 0.50%, while in India the BSE Sensex 30 edged down 0.14%.

In Japan, shares took a bigger hit as machinery orders took their biggest drop in 18 months, down -14.4%m/m versus -7.3% expected and +10.7% in October. Even though the numbers are quite volatile, a double-digit contraction does not occur that often, suggesting that the private sector’s confidence has been undermined by weak global growth prospect and the lack of any evidence of a Japanese economic pick-up. USD/JPY jumped 0.75% to 118.18 after the release of the news, slightly above the previous support that lies at 118.07. On the downside, the closest support can be found at 116.18 while the next one lies at 115.57. The bias remains to the downside.