An ugly session for WTI and Brent crude oil futures overnight with both registering declines in excess of 5%. Front-month WTI futures fell to as low as $49.77 with Brent faring even worse, declining over 6% to a low of $52.66. Both are now trading at the lowest level seen since mid-2009 with losses since mid-June last year sitting at 54%. In line with the move in crude the S&P 500 energy sector slid by 4%, something to keep in mind given the energy sector led index gains in Australia yesterday.
Business activity across New York City expanded at the fastest pace since October 2010 in December with the ISM’s business conditions index rising to 70.8. The reading, higher than the 62.4 level of November and well above the recent low of 54.8 struck in October, was led by gains in the six-month outlook and employment which rose to 72.9 and 56.8 respectively.
German consumer price inflation rose by the least since October 2009 in December with an annual increase of 0.1% recorded. The reading was below the 0.5% rate of November and expectations for a decline to 0.2% with energy prices, at -6.6% on year, largely responsible for the overall headline miss.
UK construction activity expanded at the slowest pace since July 2013 in December with the Markit/CIPS PMI gauge slipping to 57.6. The figure, below the 59.4 level of November and expectations for a decline to 59.0, was led by a contraction in civil engineering which registered its first sub-50 reading since May 2013. Despite the December slowdown residential construction still managed to record its strongest year of growth since the survey began in 1997.
The Day Ahead (AEDT)
After wafting higher yesterday on the back of vapour-like volumes the ASX 200 looks set to re-join the global energy rout today with SPI futures pointing to a fall of 85pts on the open. Having outperformed yesterday expect the energy sector to feel to full force of selling pressure.
Despite the risk-off environment in US equities and commodities the AUDUSD has pushed higher overnight with buying against USD and major pairs briefly pushing the Aussie above .8100 before easing into the New York close. While fundamentals suggest it should continue to push lower, commodity markets and narrowing yield differentials suggest so, given safe-haven buying against the Euro and current short-term positioning it may well be a case that the pair will have to move higher before resuming its slide lower. Support is found below .8085 and again at .8036 with resistance located at .8108 and .8125.
Australia’s November trade balance will be released at 11.30am this morning. Elsewhere in the region we’ll also receive Chinese services PMI for December at 12.45pm.
Data releases this evening include services PMI gauges from the US, UK and Eurozone, durable goods and factory orders from the States along with French consumer sentiment.