Article / 19 July 2016 at 7:00 GMT

Morning Markets: Lower crude subdues Asian markets

Consulting editor / TradingFloor

MM Table


  • UK: Monthly inflation data, including CPI, core CPI, PPI  (0830 GMT)
  • Germany: ZEW economic sentiment indicator (0900 GMT)
  • US: Housing starts and building permits (1230 GMT)
  • US: API weekly statistical bulletin, including crude oil and gasoline stocks (2030 GMT)

Asia-Pacific stock markets were mixed, with Chinese, Hong Kong and Australian shares falling, but Japanese shares rising. Rally attempts were broadly held in check by lower crude oil prices, with WTI testing the $45/barrel handle.

The Reserve Bank of Australia flagged sluggish consumer prices in Australia, apparently setting the stage for an August rate cut in the minutes of its July 5 meeting, published today. The bank said inflation, job-market and housing activity data in the coming month would "allow the board to refine its assessment of the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate."

The RBA also said markets had proven resilient to Brexit, and the direct impact on the Australian economy was likely to be minor.

Markets will take a close look at Germany's ZEW economic sentiment indicator for signs of how Europe's powerhouse economy is faring, with economists expecting a modest reversal of the the indicator's recent gains.

UK CPI, a Turkish central bank announcement, and the American Petroleum Institute's weekly US crude oil stocks are also on the data agenda for today (the API data after the European market close). 

Market signals

Asian session

  • RBNZ unveils plans to further tighten rules on mortgage lending to cool market
  • Investors across New Zealand will need to have a deposit of at least 40%
  • Crude oil retreated 0.2% in New York after sliding 1.6% on Monday
  • Rio Tinto iron ore sales growth for three months to June falls short of expectations
  • China's yuan steadied against the US dollar, after slipping below 6.7 level yesterday
  • Brent crude was 0.3% lower at $46.82/barrel, after shedding 1.4% on Monday
  • WTI crude was down 0.4% at $45.07, after dropping 1.6% overnight
  • Asian shares slipped on Tuesday, as a downturn in crude oil curbed enthusiasm
  • MSCI's broadest index of Asia-Pacific shares was down 0.6%
  • Japan, however, was on the rise with the Nikkei gainiing 0.73% at 0450 GMT
  • Hang Seng down 0.63% at 0405 GMT, and Shanghai down 0.71%
  • ASX was down 14 points, or 0.26%, at 0524 GMT

Forex ahead

  • New Zealand’s dollar dropped 1.2% and was at 70.33 US cents at 0456 GMT
  • AUD slipped 0.9% ahead of RBA minutes to 75.22 US cents
  • USD eased 0.4% against the JPY, to 105.79
  • Against the dollar, the GBP eased 0.3% in Asia trade to $1.3221

From the Floor

NZD plunges. "The kiwi continues to sell off after five straight days of declines,” says Liu .

Pokemon Stop. "Pokemon Go doesn’t justify the current valuation of Nintendo shares,” says Garnry.

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

In opinion

German confidence has been moving up recently, but there is likely to be a blip in the ZEW economic sentiment index for July, says James Picerno.

Asia to UK
The team at Saxo APAC Sales Trading writes that Japan's SoftBank has made a significant purchase in the UK.

Sheepish shares

Both the AUD and the share market were sheepish this morning ahead of the RBA release of minutes, but it may be that the recent rally was just a bit overdone, says Saxo's Aussie team 

No beauty
The AUDUSD rally was never going to win any beauty pageants, and Friday's reversal from local new highs looks like a bearish signal, says Saxo Bank's John J Hardy.

Turkey map

 Markets have spent the early part of this week recovering from Friday's startling
news of a failed coup attempt in Turkey. Illustration: iStock

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