8 Jan 2016
- Share markets globally have started the year on the wrong foot, facing plenty of downward pressure follow large losses on the Chinese stock exchange.
- The Chinese equity market fell 7% early in the week, triggering a “circuit breaker” which closes the market in order to prevent further falls. A day after opening, the market fell another 7%, resulting in another closure.
- Markets globally were spooked by the sharp falls in the Chinese equity market, which wasn’t helped by poor manufacturing data, leading to further fears regarding the slowing Chinese economy.
- Chinese investors rushed to cut holdings in small companies ahead of the expiration on 8th January of a six month selling ban imposed on listed companies’ major shareholders.
- In local stock news, Dick Smith Holdings was placed into voluntary administration. Sales and cash generation in December weren’t enough to salvage the company, as creditors refused to further finance the company.
- Geopolitical tensions in the Middle East also put pressure on markets, but did push the oil price higher. The oil price then fell on weaker economic data out of the US and China.
- The Australian dollar fell to 71c against the US dollar on fears the Chinese economy is slowing faster than expected, following the Chinese central bank’s fixing of their currency at its lowest level since August.
- Australian building approvals plunged in November as construction activity cools in the housing sector. Approvals for the construction of new homes fell 12.7% in the month, more than the 3% decline expected.
- China’s key manufacturing index fell, showing an accelerating pace of decline.
- China’s central bank announced a 130bn yuan (US$19.9bn) injection of short term funds into the country’s financial system in order to help stabilise the market.
- A key US manufacturing index fell, coming in below expectations. The high US dollar and low oil prices aren’t helping the US manufacturing sector.
- US construction spending fell in November and was lower than expected. It was the first decline since June 2014. The October numbers were also revised downwards.
- US employers added 257,000 jobs in December, which is the biggest gain since December 2014.
- German unemployment hit its lowest level in almost 25 years, but the record influx of migrants should start to reverse that trend.
- Geopolitical tensions rose in the Middle East after Saudi Arabia executed a prominent Iranian religious cleric. Iran then let the Saudi embassy be attacked, which resulted in a stern rebuke from the Saudis and much of the Middle East. Saudi Arabia is mostly Sunni whilst Iran is mostly Shiite (or Shia).
- North Korea apparently tested a hydrogen bomb, with tremors recorded on the Richter scale nearby. North Korea has confirmed the claim but the US is not so sure they’re telling the truth. The United Nations Security Council labelled the apparent test a clear threat to international peace and security.
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