US Market Gains
The US markets surged in overnight trading the most for 2016, as the oil price slightly bounced back up, along with reassurance by the Federal Reserve tightening of monetary policy may be much slower than initially planned.
The Dow Jones Industrial Average gained 228 points, or around 1.4%, to 16,379 points. In similar fashion, the S&P 500 added approximately 32 points, or 1.6%, to 1,922 points. Likewise, the NASDAQ finished almost 2% up, to 4,615 points.
The majority of gains came from the energy sector, as WTI Crude added over 2%, to finish over $US31 a barrel. Some of the Federal Reserve policymakers added today that their gradual tightening programme may need to be adjusted in response to the surrounding market conditions. This resulted in increasing investor confidence in the central bank to act accordingly.
However, the US market is still down more than 6% for the year, as continued volatility in both the commodity prices and China plagues investors.
European markets finish in the red, following a slump in the US markets on the day before.
The German DAX lost over 166 points, or approximately 1.6%, to 9,794 points. Similarly, the London FTSE 100 contracted by 42 points, or around 0.7%, to 5,918 points.
The Bank of England announced that they will keep rates at their record low 0.5%, sighting low inflation, slow growth expectations, volatility in China, and the slump in commodity prices as key attributors to their decision.
Asian Markets Mixed
The Asian markets were relatively mixed upon the conclusion of yesterday’s trading. The Chinese markets finished in the green yesterday, with the Shanghai Composite adding over 58 points, or around 1.9%, to 3,008 points. Along with the CSI 300, which soared over 2%, to finish at 3,221 points.
However, the Japanese market closed in the red at the end of yesterday’s trading, with the Nikkei 225 losing over 2.6%, to finish at 17,241 points. The majority of losses came from the machinery and resource sectors, as core machinery orders was lower than forecasted.
ASX: Bearish Sentiment Continues
Despite the stability of the Australian labour market, the ASX continued to slide yesterday, with the majority of losses coming from the mining sector, in response to the drop in the oil price in the previous US trading session.
The S&P/ASX 200 finished 78 points, over 1.5% lower, to 4,909 points, an over 2 year low for the ASX, as the rout in commodity prices and the uncertainty within China continues to gloom investors.
Oil miners Santos lost over 8%, to finish under $3, amongst the slump in oil prices in the previous US trading session.
Iron Ore giant Rio Tinto continued to decline, losing over 1.7%, to finish under $39. However, BHP slightly recovered 0.7%, to finish at $14.88.
The big 4 banks all finished lower, with CBA down by 1.9%, ANZ by 1.6%, NAB by 2%, and WBC by 1%. However, some of the biggest gainers were gold miners Northern Star Resources, which was up 5.5%, to finish $2.66, along with Newcrest, which closed almost 4% up, to over $13.
Author: Imran Valibhoy
Jan 15, 2016
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.