The Australian dollar fell to US$0.6842, from a session peak of US$0.6893, pulling close to a seven-year trough of US$0.6827 set on Friday. Oil prices were under pressure on Monday as the market began bracing for an influx of Iran oil after the removal of sanctions on the country. “China’s financial markets and global equities are likely to keep the risk-off sentiment alive this week”, Mark Smith, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note.
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Lower crude oil prices should in principle be a boost to a region that for the most part imports oil, but that is not happening and growth has decelerated virtually everywhere alongside the decline in oil prices.
In addition, global sanctions against Iran have been lifted, allowing Tehran to return to an already glutted oil market.
China’s economic growth is expected to have slowed again in 2015 to just under 7%.
The Shanghai Composite Index closed the morning up 1.64 per cent or 47.74 points at 2,961.58, while the CSI 300 – which tracks the large-caps listed in Shanghai and Shenzhen – finished at 3,173.49, up 1.37 per cent or 42.76 points.
Concern about China’s economy is ratcheting higher as this week begins, and investors will scrutinise a slew of data from the Asian powerhouse in the days ahead.
China will start implementing a reserve requirement ratio (RRR) to some banks involved in the offshore yuan market, the People’s Bank of China (PBOC) said in a statement on Monday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2 percent after earlier touching its lowest level since October 2011.
Australia’s S&P/ASX 200 Index lost 1 percent, paring an initial slide of as much as 1.8 percent. Yen-denominated futures traded in Chicago tumbled 4 percent to 16,795 at the end of the week.
China’s Shanghai Composite was up 0.3 percent at 2,923.66 and Hong Kong’s Hang Seng gained 0.6 percent to 19,346.27.
Production also declined 5.2 percent to 64.37 million tonnes in December from the year before, according to the numbers from the National Bureau of Statistics, dented by faltering demand.
Chotaro Morita, chief fixed income strategist at SMBC Nikko Securities, said: “The fact that USA and European shares fell below their August lows, failing to sustain their rebound, is significant”.
Traders reduced holdings of shares purchased with borrowed money for a 12th straight day yesterday, cutting the outstanding balance of margin debt on the Shanghai stock exchange to 584 billion yuan (RM39.08 billion), a four-month low.
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European markets will have to do without any United States trading or news this afternoon, thanks to Martin Luther King Day.
