Talking Points:
- Asian stocks endured a rather lackluster session Tuesday, with bulls disinclined to press their cases
- The data picture was generally quite encouraging, although Australian consumers were much gloomier than expected
- Sterling got some respite and the Dollar weakened against the other majors
Asian equity action was really all about Wall Street again on Tuesday, with stocks under some duress thanks to the Dow’s further backdown from that tantalizing 20,000 mark the session before (and apparently ignoring a new record for the Nasdaq). Crude oil prices’ sharp overnight slide didn’t help much either.
There were some dabs of local colour –notably, a strong sign that China’s economy is looking healthier – but that wasn’t enough to override the overall caution.
Australia’s benchmark ASX fell nearly 1% at one point, with losses apparent everywhere except for the gold miners, which continued their bullish start to the week. Over in Japan the Nikkei 225 lost a little ground. This was probably due to the slightly weaker overall tone in USD/JPY, something which never gives the exporter-heavy index much cheer.
The ASX endured a day of general weakness
Chart compiled using TradingView
Shares in China and South Korea also lacked vigor, in the former case despite a set of official inflation figures which showed that the Chinese economy has banished deflation. They showed factory gate prices moved at their strongest clip since September 2011 in December. Consumer prices weren’t anything like as perky but they were still clearly positive.
Hong Kong stocks managed to buck the trend, rising in step with local commodity movers, notably coke and rebar (a type of traded steel).
The rest of the session’s Asian data was a bit of a mixed bag. Australia’s consumers were less-than-enthused in November. That said, the question of whether they were really gloomy or simply drawing in their retail-spending horns before the holiday season will have to be answered by later data.
Japanese consumer confidence, meanwhile, was revealed to have been as high as its been all year in December. Whether or not that will be enough to break a long slide in household spending must remain unclear until those numbers are released at the end of this month.
Looking ahead to the European and US session, the markets await news of Canadian building permit levels and, more crucially, US employment levels as measured by the Job Openings and Labour Turnover Survey (JOLTS).
In the currency markets, the British Pound steadied a little from the hammering it had received on Monday as fears of a “hard Brexit” grew. However, as much of that punishment was meted out in the European session anyway, it would be brave to suggest that sterling was as low as it’s going. The US Dollar was a little weaker against other major peers, with traders seemingly content to bank some profit on the latest gains.
DailyFX analysts have penned their first-quarter forecasts. Take a look at them here.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
