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27 Dec 2016
By Ipek Ozkardeskaya
Markets calm, thin volumes in play
sian traders handed over a soft session. Nikkei (+0.03%) and Topix (-0.12%) remained flat, while Chinese stocks were offered despite Chinese government’s announcement of 1.8 trillion Yuan worth of spending plan including highway construction and water projects for next year. Hang Seng (-0.28%) and Shanghai’s Composite (-0.25%) ended the session in the red, while infrastructure stocks diverged positively into the close. Japanese inflation excluding fresh food decelerated at 0.4% on year to November, versus -0.3% year-on-year expected. The core inflation retreated to 0.1% year-on-year, from 0.2% a month earlier. Prices in Tokyo drop the most since February 2013.
The yen remained offered, as Japan’s Chief Cabinet Secretary Suga reiterated the importance of the foreign exchange policy for Prime Minister Abe. Japan’s fight against deflation is clearly not over. Although consumer prices are expected to pick up due to a recent rebound in oil and commodity prices, the Bank of Japan (BoJ)’s 2% inflation target remains a sizeable challenge.
The USDJPY remained soft amid the soft inflation data revived the BoJ doves. The pair traded in between 117.07/117.46 in Tokyo. There is solid support sub-117.00. The key short-term support stands at 116.55 (major 38.2% retracement on Dec 8th to Dec 15th rise), for an extension of the actual bullish formation toward the 120.00 handle.
The euro remained offered in Asia, while the Eurostoxx are flat in, with limited appetite in all sectors.
German financials (+0.02%) lack momentum amid Deutsche Bank agreed to pay $7.2 billion, versus $14 billion mentioned by the US Department of Justice in September. Although the deal does not cover for other litigates including price fixing in the foreign exchange and metals markets, interbank rates manipulation and billions of dollars worth of funds driven out of Russia, last week’s settlement has been a good short-term relief for investors, given that Deutsche Bank needn’t raise capital to cover for legal charges in the immediate future.
In Italy, rescue of banks begin after the Italian government approved €20 billion aid package.
US stocks set for a quiet open
The US stock futures made a quiet start to the week. The Dow jones is called 9 points lower at the open at 19924. The S&P500 is seen a touch softer at 2262.
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 71% of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money.
