ASIA

Asian equity markets traded in negative territory following Wall Street’s losses and crude oils continued weakness after pulling back from its largest 2-day gain in 7 years. Nikkei posted a loss of 1.81% while the Shanghai Composite Index weakened by 6.4%, despite PBOC injecting liquidity at levels not seen in 3 years. Analyst are predicting that the composite will drop at least another 12.5% to 2400 in the coming days. The hang Seng index is down 2.48%, extending this months losses to 13.6% and year on year losses north of 30%. China will be on all radars with further stimulus expected as the PBOC looks to stem what seems to be a never ending drop in equity prices.

EURO ZONE

ECB`s Draghi stated that he currently does not see any warning signs of large financial instability and wants to see more measures in the form of fiscal policies and structural reforms being used to combat the debt overhang. The EURUSD is currently being bid above 1.0800 as we see flight to safety in light of recent volatility in China.

UNITED STATES

US equities closed out yesterdays session in negative territory despite bursts of buying which could do little to overcome the slide ion crude oil prices. The DJIA finished down 1.29%, the S&P 500 closed down 1.56% and the NASDAQ 100 closed down 1.48%. The dollar index is still range bound as the USD fails to make any significant gains or losses and is trading between 98.9 and 99.8 as markets look for more information before breaking either way. Today sees the CB Consumer Confidence being released, expected at 96.6. A better than expect number will see the USD gain across the board. However a weaker number will see the USD lose against its counterparts.

UNITED KINGDOM

BOE`s Forbes stated that until labour costs are in line with 2% inflation, there would be no need to increase rates. The GBP continues to weaken against its counter parties with little standing in the bullish bias. Today sees BOE Gov Carney testifying on the Financial Stability Report, a hawkish tone will see the GBP gain some relief but a dovish tone might be the catalyst that sees the GBP extend its multi year lows.

CRUDE OIL

Crude oil retreated from the $33 after posting the largest 2 day rally, $5, in over 7 years. The level could not be held as supply factors continue to weigh down on the commodity. Opec members are at a standoff and refuse to cut production despite the ever slowing global economy. Oil producers from Ecuador to Kuwait are employing game theory in which nobody wants to move first which will see the price of oil continue south until the pain is such that Opec members eventually agree to meet.