Forex Morning Comments: il risk-off torna prepotentemente sui mercati
Sparita l’illusione che il vertice del Consiglio europeo di domenica 23 potesse fungere da panacea per i problemi sovrani e con i dati cinesi della notte ad indicare un rallentamento peggiore delle previsioni, gli investitori hanno immediatamente invertito la marcia inserendo nuovamente il risk-off. Non potendo più contare su un conto-alla-rovescia- per la conclusione positiva del tema greco, il percorso si fa ancora lungo e tortuoso senza avere a disposizione alcuna carta risolutiva. Anche il mercato australiano ha subito perdite importanti soprattutto nel settore delle materie prime, segnale che non vi è alcuna area immune alla crisi globale. Indizi per un imminente taglio dei tassi da parte della banca centrale australiana.
FOREX MORNING COMMENTS
London – 18th October 2011
(Comments below have been provided by CMC Markets Sales Trader Ben Taylor and Chief Market Analyst Ric Spooner)
Both last night’s announcement in Germany and today’s Chinese figures have given the market reason to take profits, after unbridled optimism took hold of traders since the beginning of October.
It now seems we will not get a resolution on a debt rescue plan by 23rd October (as the market had expected) and China resilience to external issues is showing signs of weakness. This weakness manifested itself last week with China’s slowing balance of trade figure and today’s Year on Year GDP result.
Last night’s announcement by German spokesperson, Steffen Seibert revealed that counter to what the market believes there is no straight line to EU problem resolution.
The path ahead is long and winding, there is no single golden bullet to kill the crisis. The resolution is arduous and debate between countries is problematic as countries fight between ideas of the greater good and conflicting local interests.
Leveraging the EFSF, recapitalizing the banks, ensuring an appropriate write down of Greek debt is just the beginning of the process to fix the problem. The Chinese Year on Year GDP data was all the market needed today to ensure its downward fate was sealed. The September Year on Year GDP figure revealed a fall from 9.5% to 9.1%. Whilst a fall in GDP was expected, the extent to the fall was what had our market searching for the exit. The Chinese markets were particularly poor following the result, and their falls gave clear guidance to our market. Today’s falls have been especially harsh in commodity plays.
Fortescue, BHP and Rio Tinto all took large hits. The moves show us that our commodity companies are not immune to falling growth prospects in China and a delay in debt solutions in Europe. Today’s October RBA minutes draw attention to upcoming inflation figures as a guide to the future of interest rates. If we find ourselves in an appropriate inflation band, I would not be surprised to see the RBA cut rates on Melbourne cup day to help our businesses not geared to the commodities markets European and US markets provided a weak lead for today’s trading with the largest “risk off” session since the major low on 4 October.
The announcement by German spokesperson Steffen Seibert that European leaders won’t be in a position to agree on a debt rescue plan at their meeting on 23 October is another indication of the political obstacles to forging a workable solution for the Eurozone. Investors have been reminded of the need for caution until details of any proposal are formally released and agreed on.
Slightly disappointing profit results from IBM and Wells Fargo will also weigh on investor sentiment here today. Wells Fargo’s result reflects the type of margin pressure being felt by developed economy banks that have increased deposits but are unable to increase their loan book to creditworthy customers at the same rate. IBM shares were sold in after hours trading after narrowly missing revenue estimates.