In what is now akin to the movie ‘Groundhog Day’ crude oil futures copped another pasting overnight with front month Brent and WTI futures tumbling by a further 5%. The fall now leaves the total percentage declines from late July 2014 at 59% and 57% respectively. Not only was it a bad night for energy but also Dr Copper with 3-month futures falling over 1%. From mid-July futures have fallen in excess of 17% with the contract now plumbing lows last seen in June 2010.

India consumer price inflation ticked higher in December, rising 5.0% on year. The reading was higher than the 4.38% level of November but below expectations for an increase of 5.40%. Elsewhere industrial output rebounded in November with an annual expansion of 3.8% recorded. The reading, far stronger than the 4.2% contraction October and forecasts for an increase of 2.2%, was the highest level seen since June 2014. A 3.4% annual lift in manufacturing output, up from a 7.4% contraction in October, was able to offset slower growth in both mining and electrical output.

Russian consumer prices leapt by 2.6% in December, the equal-highest month-on-month increase since January 2002. The figure was well above the 1.5% gain expected and left the annual rate at 11.4%, a level not seen since August 2009.

 

The Day Ahead (AEDT)

The ASX 200 looks set to continue its selloff this morning with SPI futures pointing to a fall of 42pts on the open. Ex-gold producers losses across the materials and energy sectors are likely to be heavy although, with in the onset of Chinese trade data later in the session, there is a possibility that we’ll bounce quickly off the lows ahead of this important event. Post the trade data it will be interesting to see the reaction across markets, particularly if it reveals the Chinese have been buying heavily in key commodities given recent price declines. With sentiment towards commodities almost unilaterally bearish it will have to take some equally uninspiring data to keep the complex under pressure, at least in the short-term. If not, with positioning increasingly short, there is more than a reasonable chance that a short-squeeze may occur.

The AUDUSD has reversed all of its post-NFP gains overnight with the pair currently fetching .8152. With no major domestic data releases scheduled it will likely be left up to the Chinese trade data later in the session to drive the Aussie’s movements. While clearly still in a bear-market, something that encourages the mindset to ‘sell on rallies’, as is the case with commodity-linked equities the trade data will likely have to come in well below expectations to maintain the selling pressure. Support is found at .8132, .8100 and .8084 with resistance kicking in at .8170, .8200, .8215 and again at .8254.

Chinese trade data for December will be released around 1pm today. Markets are looking for the trade surplus to narrow to $49.85b, down from $54.47b in November. Exports are forecast to increase 6.8% on year, up from 4.7%, with imports expected to decline 7.4% on the back of lower commodity prices. Elsewhere in the region we’ll also receive Japanese bank lending and South Korean terms of trade.

Data releases this evening include Jolts job openings, NFIB small business confidence and Federal budget figures from the States, CPI, PPI and house price data from the UK, CPI and unemployment figures from Sweden, German wholesale price inflation along with Italian industrial output.

 

Market Map Jan 13 2015

 

 

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