GOOD MORNING CM TRADING
Asian equities trade lower across the board in the wake of Friday’s crude-inspired losses on Wall Street
• Subsequently, commodity-linked currencies lost some ground against their major counterparts, while JPY benefitted from its safe-haven status
• Looking ahead, highlights Include German IFO survey, US New Home Sales, ECB's Draghi, Mersch, Coeure, Nowotny and Fed's Kashkari
Asia equity markets began the week in negative territory following last Friday’s losses on Wall St. where a decline in crude of over 3% dampened sentiment. Nikkei 225 (-0.9%) was among the region’s worst performers as exporters suffered from a firmer JPY, while ASX 200 (Unch.) was initially pressured by energy names amid doubts of an output freeze deal, although the index recovered in late trade. Shanghai Comp. (-0.7%) and Hang Seng (-0.7%) conformed to the downbeat tone with property and financials weighed after Nanjin City announced property restrictions and on reports Goldman Sachs are cutting HK-based jobs, while Munich Re are also scaling back its presence in Hong Kong.
The Peoples Bank of China injected CNY 120bln in 14-day reverse repos and CNY 10bln in 28-day reverse repos.
The Peoples Bank of China set mid-point at 6.6744 (Prev. 6.6670)
EUROPE & UNITED KINGDOM
Fitch affirmed Germany at AAA with a stable outlook.
CBI stated optimism in UK financial services declined for a third consecutive quarter which is the longest run of deterioration in seven years.
German lawmakers are losing patience with the UK over reported bravado during Brexit negotiations, according to the Financial Times. This has allegedly prompted Berlin to rethink how hard to push back during Brexit talks.
Jeremy Corbyn has been re-elected as the leader of the opposition Labour Party.
Commodity linked currencies remained subdued after Friday’s oil-triggered weakness, while NZD also suffered from poor trade figures in which the deficit was its largest in two years and exports missed expectations. Elsewhere, safe-haven JPY was firmer amid broad-based risk averse sentiment after USD/JPY fluctuated around 101.00, while USD/TRY rose to its highest in 6 weeks after Moody’s downgraded Turkey’s credit rating to junk status.
Turkey's credit rating was downgraded by one notch to junk status of Ba1; with a stable outlook.
Former Japanese vice finance minister Sakakibara aka 'Mr Yen' sees USD/JPY slowly declining to 90.00 next year and commented that it would be time to talk with US when USD/JPY is at 80.00.
New Zealand Trade Balance (NZD)(Aug) Y/Y -3100mln vs. Exp. -2700mln (Prev. -3030mln)
– Exports (NZD)(Aug) 4.65bln vs. Exp. 3.57bln (Prev. 3.96bln)
– Imports (NZD)(Aug) 3.39bln vs. Exp. 4.31bln (Prev. 4.40bln)
Oil nursed some of Friday’s declines where WTI fell over 3% after comments from Saudi and Iran increased doubts regarding an output freeze deal. Elsewhere, gold (-0.4%) prices were weaker overnight amid profit taking following last week’s biggest weekly gain in 2 months, with Citi also releasing a cautious note on the precious metal, while copper also pulled back from Friday’s highs amid a widespread risk averse tone.
Algeria oil minister said that there is still possibility for an output freeze deal, but added that the meeting this week could only result in elements of a deal. The energy minister also stated that Saudi Arabia is ready to freeze output at January levels. However, Saudi Arabia themselves see the upcoming meeting in Algiers as a consultation and does not expect any decisions to be made, according to sources citing a delegate on Friday. Furthermore, Iran is unlikely to agree to a deal to freeze its crude production at current levels, according to an Iranian official on Friday.
Citigroup said gold could be in for a bumpy ride with Donald Trump having a 40% chance of winning the US presidential election which could cause increased volatility and as US investors will also be preparing for the possibility of higher US rates.
Russia has been condemned by EU and US Foreign Ministers amongst others, over violating an already shaky ceasefire in Syria. This comes after Russia provided air cover to Assad's troops who mounted an assault on Aleppo late on Friday.
North Korea suggested the possibility of either conducting a sixth nuclear test or testing a long-range ballistic missile next month.
Washington Post/ABC Survey has Trump and Clinton tied at 41% each among registered voters.
Fed's Kaplan (Non-Voter, Neutral) said on Friday that US GDP growth is sluggish by any standard.
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