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- Asian shares fell on Monday as Chinese stocks extended last week’s sharp losses, while the yuan bounced in volatile trade hours ahead of an IMF decision on whether to promote it to a basket of global reserve currencies. Mainland Chinese shares .SSECCSI300 opened slightly higher but then sank 1.7 percent, after posting their biggest one-day drops in more than three months on Friday. Market sentiment remained shaky due to the resumption of IPOs, renewed efforts by the securities regulator to clamp down on leveraged buying and concerns about the cooling economy.
- Investors are focusing on the ECB’s policy decision on Thursday, with growing expectations that the ECB could cut interest rates by 20 basis points. The prospects of an ECB easing also is putting pressure on the central bank of Switzerland, surrounded by euro zone countries, to take similar actions to stem any strengthening in the Swiss franc. In contrast, the dollar is supported as the Federal Reserve is widely tipped to hike U.S. interest rates at its mid-December policy meeting. In commodities, gold licked wounds after Friday’s two percent fall that took it to a near six-year low. The yellow metal logged its sixth straight weekly decline on a firm U.S. dollar and prospects of a U.S. interest rate rise next month.
- Japan’s industrial output rose for a second straight month in October and retail sales grew much faster than expected – a tentative sign of the economy’s recovery from a recession. The latest indicator should ease concern among policymakers after data last week showed weakness in household spending and consumer inflation, which have kept pressure on the Bank of Japan to top up its already massive stimulus. Trade ministry data on Monday showed factory output rose 1.4 percent month-on-month in October, versus economists’ estimate for a 1.9 percent gain and 1.1 percent increase in September, led by general-purpose machinery, cars and electronics. Separate data showed retail sales rose 1.8 percent in the year to October, more than a 0.8 percent annual gain expected, on sales of clothes, food and drink, cars and home appliances.
- Brent crude futures dipped on Monday as traders remained cautious ahead of an OPEC meeting later this week and as a widely expected U.S. interest rate hike strengthened the dollar. Oil prices are heading for declines of as much as 10 percent this month, with a supply glut showing no signs of easing and a firmer U.S. dollar making greenback-denominated contracts more expensive for holders of other currencies. While most analysts do not expect OPEC to cut production at an important policy meeting on Dec.4, they are mindful that Saudi Arabia is inching towards the idea of working on price support measures with other oil producers.. OPEC and Russia could make “some sort of co-ordinated attempt to reduce production. The glut continues, but I do feel that it could be reversed quite quickly given the change in interest rates in the United States, which would indicate more demand. But OPEC officials have called into question an upbeat forecast from the group’s researchers, with some skeptical there will be a quick easing of the supply glut in 2016. The analyst’s expects higher demand for OPEC oil next year as supply from producers such as the United States declines, potentially reducing the glut, with world oil demand seen rising by 1.25 million barrels a day. Oil prices have more than halved since OPEC made a historic decision last year to defend market share by refusing to prop up prices through supply cuts. The shift was led by Saudi Arabia, supported by other Gulf OPEC members, but doubts about the policy among less wealthy members are growing. Traders will also be closely watching the U.S. non-farm payrolls report due on Friday. A strong jobs report could seal the case for a rate hike at the U.S. Federal Reserve’s Dec. 15-16 meeting.