MARKET BRIEFING – LONDON OPEN 19.08.2015
Asian shares dropped to two-year low this morning, as Chinese stock market continues to decline, following last week’s yuan devaluation. Fears about the stability of the China’s economy influenced a further sell-off with Shanghai Composite Index sliding 6.1%.
In a stabilization attempt, yesterday China’s Central bank injected 120 Billion yuan into the market, which was largest since January 2014 when the bank added 150 billion yuan liquidity through 14-day repos.
However, market confidence declined further, when the China’s “national team”, the government assigned group, which was buying stocks to support the market, has reduced its operations, causing the concerns that the government is withdrawing its support.
“China’s securities regulator said late last week that the market had normalised and the government would allow market forces to play a bigger role in determining stock prices” – Reuters reports.
The slowdown of the China’s economy has substantially weakened commodity prices. Copper value, for example, slid to six-year low, breaking the psychological level of 5.000 US dollars per tonne and now trading below it.
Brent price declined to more than a five-month low of 48.44 yesterday, continuing the downward trend it set at the end of the June last year.
Presently the main concerns of the global investors are the Chinese economy and the US interest rate hike, which is expected to be introduced by the end of this year including the possibility of this action as early as the following month.
Following last week yuan devaluation and current market turmoil, there are fears that the crisis will spread to the other economies, causing pressure even on the US-denominated debt.
The emerging economies markets were hit the hardest when MSCI emerging markets index dropped to more than 20%, its lowest level since 2011. The number of the emerging markets currencies are facing the liquidity outflow.
The investments are being transferred to the US dollar, currently the market’s “safe heaven”, with the prospects of the nearing interest rate hike adding stability to the major world’s reserve currency.
The US S&P 500 however, slid to 0.26% yesterday. The September’s futures of the UK’s FTSE 100 have also opened lower this morning after the trend formed a lower high last week.
Gold, conversely, is trading higher currently targeting to retest last week’s high of 1127.00, after it reconfirmed the breach of the downward trend channel last Wednesday.
EURUSD
The intraday technical outlook
Trend 1 hour: Range
Target 1: 1.1121
Target 2: 1.0918
Projected range in ATR’s: 0.0105
Daily control level: 1.1210
GBPUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.5763
Target 2: 1.5553
Projected range in ATR’s: 0.0105
Daily control level: 1.5670
USDJPY
The intraday technical outlook
Trend 1 hour: Range
Target 1: 125.04
Target 2: 123.74
Projected range in ATR’s: 0.6500
Daily control level: 125.25
USDCHF
The intraday technical outlook
Trend 1 hour: Range
Target 1: 0.9857
Target 2: 0.9683
Projected range in ATR’s: 0.0087
Daily control level: 0.9710
USDCAD
The intraday technical outlook
Trend 1 hour: Range
Target 1: 1.3176
Target 2: 1.2938
Projected range in ATR’s: 0.0120
Daily control level: 1.2910
AUDUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 0.7425
Target 2: 0.7245
Projected range in ATR’s: 0.0090
Daily control level: 0.7425
GOLD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1132.24
Target 2: 1102.84
Projected range in ATR’s: 14.70
Daily control level: 1077.00
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 50.19
Target 2: 47.21
Projected range in ATR’s: 1.4900
Daily control level: 55.50
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