Read full technical analysis report here
- Asian shares fell on Wednesday and most emerging currencies retreated as China allowed the yuan to weaken further, stoking fears about its slowing economy, while a North Korean nuclear test heightened geopolitical tensions. Souring sentiment toward riskier assets in turn lifted safe-havens such as the Japanese yen and U.S. Treasuries. China has guided the yuan lower since a surprise devaluation of the currency last summer, rattling traders who fear it could eventually set off a round of competitive devaluations which will put further pressure on other emerging economies. Some see the tactic as a desperate attempt by China to shore up growth, prompting concerns that the world’s second-biggest economy could be even weaker than imagined, though others say further yuan weakness is inevitable in the face of the strong U.S. dollar. A weaker yuan in theory improves the competitiveness of Chinese exports but the import cost increase it inflicts on the country’s manufacturers would be an unwelcome side effect. The latest worrying news on China came in a private survey which showed activity in China’s services sector expanded at its slowest rate in 17 months in December, bucking robust findings in an official survey and a further indication that the world’s second-largest economy may be losing steam. Policymakers and economists have been hoping that growth in services would offset persistent weakness in Chinese manufacturing and keep the economy from cooling too sharply.
- Activity in China’s services sector expanded at its slowest rate in 17 months in December, a private survey showed on Wednesday, in a further indication that the world’s second-largest economy may be losing steam. Policymakers and economists have hoped Beijing’s push to restructure the economy with a greater emphasis on services and consumption would more than offset the economic drag from persistent factory weakness, but the survey’s findings did not bolster that view. The Caixin/Markit Purchasing Managers’ Index(PMI) fell to 50.2 in December from 51.2 in November.
- U.S. Stock futures ESc1 fell more than one percent in Asian trade on Wednesday and the MSCI emerging equity index fell to 6 1/2-year low on a worrying news on the Chinese economy and North Korean security. China’s central bank guided the yuan lower, while a survey on China’s services sector showed a deterioration. In North Korea, an earthquake that appears to have been man-made near a nuclear test site was detected by several monitoring agencies.
- Oil prices on Wednesday gave back earlier gains, retreating toward the previous session’s close near 11-year lows as concerns over growing supply and rising stock levels outweighed tensions between key Middle East producers. A rift between Saudi Arabia and Iran over the Saudi execution of a Shi’ite cleric failed to boost prices this week, as it appeared to put an end to speculation that OPEC members could agree on production cuts to lift prices. U.S. crude for February delivery was 13 cents higher at $36.10 a barrel at 0419 GMT (11.19 p.m. ET Tuesday), after slipping 79 cents in the previous session. Iranian oil exports are widely expected to increase in 2016 as Western sanctions against the country for its alleged nuclear weapons program are likely to be lifted. Still, a senior Iranian oil official said the country could moderate oil output and exports once the sanctions are lifted to avoid putting prices under further pressure. Concerns over mounting stock levels continue to add pressure to prices, with crude inventories in the United States likely to have risen by 439,000 barrels last week, according to a Reuters poll of eight analysts. The U.S. Energy Information Administration (EIA) will publish its closely watched weekly data at 1530 GMT. Data from American Petroleum Institute (API), an industry group, showed crude stocks fell last week by 5.6 million barrels, while stocks at the Cushing, Oklahoma, delivery hub rose by 1.4 million barrels. The oil market also faced pressure from a strengthening dollar which hovered near a one-month high reached on Tuesday as traders sought safer havens.