Article / 24 May 2016 at 7:00 GMT

Morning Markets: Asian contagion set to rattle Europe

Deputy Editor /




  • Germany: ZEW Economic Sentiment Indicators (0900 GMT)
  • US: New Home Sales (1400 GMT)
  • US: Richmond Fed Manufacturing Index (1400 GMT) 
Gloom prevailed across much of Asia today and Europe looks set to follow through in similar vein as market participants worldwide await fresh clues from the US Federal Reserve on the timing of its next interest rate hike. The market has lately viewed June as an unlikely time for a Fed hike because of the proximity of the Brexit referendum on June 23, preferring July instead. However, opinions may well be revised in the wake of overnight comments by board member James Bullard who notably decoupled the British referendum from the central bank's decision-making process.

In Japan, the yen resumed its rise against the US dollar, fuelling negative sentiment and driving the Nikkei 225 into the red. Equities headed lower in Shanghai as well, wiping out recent modest gains. Korea's Kospi Composite and Hong Kong's Hang Seng both retreated as well. The contagious equity market gloom pushed shares lower in Australia as well. However India's benchmark S&P BSE Sensex was an exception, making modest gains.

Elsewhere, commodities, which were on a roll last week with the exception of copper, are trending weaker with crude oil and gold shedding recent gains. 

Market signals

Asian session

  • The rising yen weighed on share investor sentiment in Tokyo
  • The Nikkei 225 was down by a sharp 0.73% to 16,532.24 at 0445 GMT
  • China's Shanghai Composite was down by 0.89% to 2,818.42 at 0507 GMT
  • Hong Kong's Hang Seng was down 0.32% to 19,745.01 at 0513 GMT
  • Korea's Kospi Composite was down 0.61% to 1,943.36 at 0451 GMT
  • India's S&P BSE Sensex was up by a modest 0.07% to 25,247.07 at 0510 GMT
  • Australian sharemarket followed the lead in regional markets and headed lower
  • The S&P/ASX200 closed down 0.26% at 5,304.90
  • Iron ore to in China tumbled 5.4% to just $52.70/tonne
  • Iron ore futures suggest the price could fall as low as $50/tonne later today
  • Top miners BHP Billiton and Rio Tinto defied the ore price gloom with share price gains
  • Comments from RBA Governor Glenn Stevens impacted the Australian dollar

Forex ahead

  • The US dollar fell nearly 1% against the yen on Monday but was stable against the euro
  • The US dollar was worth just ¥109.3140 at 0514 GMT
  • The Aussie dollar fell on comments from the RBA governor and the iron ore price fall
  • The Aussie dollar was worth just 0.7197 at 0513GMT

From the Floor

Japan’s marker. “Aso defined a ‘disorderly’ market as a five-yen move in two days and that could lead to intervention,” says Moltke-Leth.

European banks. ”It’s a disastrous industry at the moment,” says Garnry.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion


The Germans seem to believe that economic confidence is returning, which may turn out to be a self-fulfilling prophecy, says James Picerno.

Hawkish Fed
There have been more bullish speeches from the Fed favouring two rate hikes this year, writes the team at Saxo APAC Sales Trading.

Copper hammered
Hedge funds increased commodity bets by 3% to 1.15 million lots, a two-year high, during the week ending May 17. Net buying was seen across all sectors apart from metals due to a second week of aggressive copper selling, reports Ole Hansen.

This week's G7 meeting in Japan is a chance for industrial democracies to push for consensus on key issues like the environment, energy, health care and global growth. Photo: iStock

Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail