Article / 06 December 2017 at 8:00 GMT

Morning Markets: Gloom for equities, copper and Brexit

Senior Editor / Saxo Bank
Denmark

chart

 

Watchlist

  • Australia: GDP growth (already published)
  • Germany: Manufacturing Orders (07:00 GMT)
  • China: CPI (08:15 GMT)
  • US: ADP National Employment Report (13:15 GMT)
  • Canada: Bank of Canada interest rate announcement (15:00 GMT)
  • US: EIA Weekly Petroleum Status Report (15:30 GMT)

European equities will likely have another weak start today after Asian stocks headed sharply lower overnight, with falls for stocks across a broad range of industries. Japan's benchmark Nikkei 225 took a near 2% plunge, while Hong Kong's Hang Seng, South Korea's Kospi Composite and the Shanghai Composite all retreated as well. The tech slide and falls for commodities, especially copper, kicked off the gloom. The declines comes amid increasing concern about Chinese growth early next year, which is seeing having a negative impact on demand for industrial metals.

Elsewhere, the Brexit stalemate continues and there's no sign of a solution on the horizon as internal feuding inside the UK's ruling conservative party is blocking progress. Though PM Theresa May and her Brexit secretary, David Davis, have hinted at at UK-wide "regulatory alignment" to work around the Irish border problem, it's difficult to see hardline Brexiteers agreeeing to that. One headline in today's Irish Times nicely sums up the current state of things: "Divided British government doesn't know what it wants".

Market signals

Asian session

  • After a selloff on Wall Street and a sharp fall in copper, Asian markets lost ground
  • Goldman Sachs said it doesn't think US tax cuts will improve medium-term growth
  • Japan's Nikkei 225 took a dive; it closed down 1.97% at 22,177.04
  • The Shanghai Composite was down by a hefty 0.92% to 3,273.15 at 0541 GMT
  • Alibaba's Jack Ma praised China's one-party system at an internet summit today
  • The Hang Seng retreated; it was down 1.68% to 28,358.06 at 0524 GMT
  • HKSE-listed tech giant Tencent fell heavily, adding to recent sharp falls
  • Copper prices were down 4.31% in the early hours of the Asian trading day
  • Australia's Q3 GDP growth was 0.6% (0.7% was forecast), and 2.8% annually (vs 3.0%) 
  • Australia's flagging growth makes any RBA rate hikes unlikely in the near term
  • Falls for miners outweighed gains for banks, dragging down the S&P/ASX200
  • The S&P/ASX200 closed down 0.43% at 5,946.10
  • The cryptocurrency Bitcoin soared to $12,000

Forex ahead

  • US dollar lost ground to the yen; it was worth ¥112.1000 at 0556 GMT
  • AUD fell below 0.76 on weak Aussie GDP data; it was worth 0.7583 at 0556 GMT

From the Floor

Aussie lower. “We saw a brutal reversal in AUD as copper plunged,” says Hardy

China sells off. “The Hang Seng is trying to find support just above 28,000,” says Garnry


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

In opinion

Copper hammered
Wall Street's negative lead and a sharp fall in copper weighed on the S&P/ASX200, writes the team at Saxo Capital Markets (Australia).


Tencent in tech tumble
Like other global tech stocks, the telecommunications and internet giant Tencent has taken a hit; dragging Hong Kong's benchmark Hang Seng index with it, says Saxo APAC Sales Trading.


nnn
  Beijing, China ... Jack Ma, the billionaire chairman of Alibaba, ventured into politics today, when he said China's one-party system delivers stability for the Asian nation. Photo: Shutterstock

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06 December
fxtime fxtime
Cable is dropping and the greater risk is a surprise outcome and spike to the upside IMHO.

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