Asian and U.S. stocks will stay in the red zone today as WTI plunges

January 15, 2016

Asian markets plunged at Friday’s session as investors have ignored the yesterday’s rise in U.S. indices and also due to the positive macroeconomic data from Australia. Nikkei Index declined by 0.41% while S&P/ASX 200 plummeted by 0.79%.

Mortgage data in Australia (November Home Loans) which came out during the Asian Session today demonstrated a 1.8% growth beating negative estimate of a 0.5% decline. Australia investment lending in November showed a 0.7% increase comparing to -5.8% in October. These reports together with the positive labor market changes released yesterday indicate that Australia is on the way to recovery after the biggest Iron Ore supplier was hit by the manufacturing crisis in China.

December New Yuan Loans report demonstrated a decrease by more than 100B Yuan, dropping from 708.8B to 597.8B, missing the forecast of 700B. Aggregate financing increased by more than 800B Yuan, from 1018.1B to 1820B. The efforts of Chinese government to support manufacturing, exporters in particular, trying to inject more liquidity into markets also reflects adepreciation of CNY against its U.S. peer from 6.33 in October to 6.48 in December and then 6.58 in January 2016.

China ShComp Index continues to decline, dropping by 3.55% today. Coal and steel companies are among the worst performers. Nikkei 225 fell by 0.5%, Hang Seng lost 1.37%.

In contrast, U.S. stocks were nudged up by an upswing in Oil prices: DJIA closed at +1.41%, S&P 500 +1.67%. Oil and pipeline companies were among the best performers. With Oil prices falling today, (WTI -2.82%) it is likely that Friday session will bemostly bearish for U.S. Stocks.

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