Five Things Everyone Will Be Talking About Today
No respite for oil, China defends the yuan, and Goldman says there will come a time to buy stocks. Here are some of the things people in markets are talking about today.
Both WTI and Brent crude dropped below $31 a barrel this morning before recovering to trade at $31.25 and $31.62 respectively at 10:53 a.m. London time. Emmanuel Kachikwu, Nigeria’s minister of state for petroleum resources, said that OPEC will try to move a meeting scheduled for June to March in an effort to coordinate the group's reaction to collapsing prices. Stocks across the oil-producing Gulf fell again, with Qatar's QE Index dropping to its lowest since September 2013.
China stepped up its defence of the yuan, buying the currency in Hong Kong and sparking a record surge in the city’s money-market rates, pushing the overnight rate on the interbank market to 66.82 percent. “A 66 percent rate is murderous for others being swept up in this who are not speculating,”said Michael Every, head of financial markets research at Rabobank Group. The Chinese intervention hasn't convinced everyone, with Pacific Investment Management Co. saying the yuan is poised to fall further.
Amidst all the turmoil in China, the Japanese yen has seen strength this year on a safe-haven bid. The currency is now the most overbought versus the dollar since 2011, according to an indicator of the yen's future direction.
Goldman says to buy stocks - just not yet
Goldman Sachs Group Inc.’s Christian Mueller-Glissmann says he is neutral on stocks at the moment, but the time will come to buy stocks if the China-led rout causes further declines in global equity prices. China's Shanghai Index closed 0.2 percent higher and in Europe the Stoxx 600 was 1.6 percent higher at 11:17 a.m. London time. Meanwhile, the Nasdaq is on its worst losing streak since January of 2008. The index may break the streak today, however, as futures are currently pointing to solid gains.
Pound drops to lowest since 2010
The pound dropped against all 16 of its major peers and reached its lowest against the dollar since June 2010 after the London-based Office for National Statistics said industrial production unexpectedly fell 0.7 percent in November. A pound bought $1.4430 at 11:35 a.m. London time. Current market pricing suggests that the odds of any Bank of England rate hike in 2016 are down to just 31 percent.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Odd Lots podcast goes bananas.
- HSBC is likely to stay based in London.
- Citigroup's Buiter sees one-in-three chance of Brexit.
- BofA: Rail traffic is saying something worrying about the U.S. economy.
- Rand's flash-crash exposes cracks in currency liquidity.
- Putin says sheltering Assad would be easier than Snowden asylum.
- Explosion in Istanbul's main tourist area leaves 10 dead.
Want to receive this post, and more, into your inbox every morning? Sign up here