China has shot to the top of global investors’ risk lists for 2016, after a renewed plunge in its stock markets and yuan currency fuelled worries that the economy may be deteriorating.
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MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.7 percent, bouncing off a four-year low touched earlier.
TOUGH YEAR: The first two weeks of this year were the worst start to a year in the history of the Dow and the S&P 500.
“At the root of the selling we’ve seen this year has been the imbalance of oil supply and demand, so until the oil price moves calm down, the stock market will struggle”. “The questions left are how much is China’s economy in fact slowing down, and when will we see a floor for the price of oil”.
GAINERS: Utilities and telecommunications stocks traded higher. Consumer goods maker Procter & Gamble, the maker of Tide detergent and Charmin toilet paper, gained $1.75, or 2.3 percent, to $76.73.
Crude continued to fall Tuesday, with West Texas Intermediate futures losing 3.3 per cent. The International Energy Agency trimmed its 2016 estimates for global oil demand amid weakness in China.
“The mining rally is a relief rally with the stocks putting on gains after such heavy falls recently”, GKFX analyst James Hughes told AFP. Marathon Oil fell 46 cents, or 5.7 percent, to $7.68.
USA gold for February delivery fell $1.60 to settle at $1,089.10 an ounce. Industrial output rose 5.9% compared with December 2014 instead of a 6% forecast increase. Delta expects fuel to be even less expensive in the first quarter. Its shares rose $1.46, or 3.3 percent, to $45.96. UnitedHealth was up 2.4 percent at $111.91, giving the biggest boost to the Dow, after the health insurer reported a 30 percent rise in quarterly revenue. Netflix’s stock surged 8 percent in extended trading to $116.75.
TIFFANY TUMBLES: Jewelry retailer Tiffany fell after it said sales dropped in the fourth quarter. Tommy Xie, economist at OCBC Bank in Singapore, told Reuters he expected more stimulus to the economy from the PBOC, but the stability of the yuan, also known as the renminbi, was critical to maintaining growth.
Quarter-on-quarter, growth slipped to 1.6 percent in the last three months of 2015 from 1.8 percent in the third.
“The fact that USA and European shares fell below their August lows, failing to sustain their rebound, is significant”, said Chotaro Morita, chief fixed income strategist at SMBC Nikko Securities. Job search company Seek rose 0.7 percent after receiving a takeover offer from two China-based investment firms.
Bank of America also clocked gains, with the stock up by 1.9%, after posting better-than-expected earnings for the three months to the end of December, as expenses declined. The U.S. contract did not settle on Monday, a U.S. holiday. Japan’s Nikkei 225 inched up 0.6 per cent to 17,048.37.
CURRENCIES: The U.S. dollar edged up to 118.00 yen from 117.50 yen on Monday. The Australian dollar, whose fortunes are closely linked to China, a major market for Australia, rose 1.1 percent to $0.6935. The yield on the 10-year Treasury note, which has slumped this year, held steady at 2.04 per cent.
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In other trading of energy futures, the price of wholesale gasoline inched up 0.5 cents to $1.026 a gallon. Heating oil fell 2.6 cents to 90.9 cents a gallon. In afternoon trade WTI was down 3.3 per cent at US$27.52 and Brent was off 1.9 per cent at US$28.22.
