Morning Briefing: Oil, regional issues subdue markets

Morning Briefing: Oil, regional issues subdue markets

Morning Briefing: Oil, regional issues subdue markets Oil, regional issues subdue markets
Concern over global oversupply of oil remains the largest drag on equities Wednesday. With US crude below $40 for the first time since April, rig counts higher and OPEC nations increasing output the market is decidedly bearish.

Other issues weighing on investors’ sentiment include Japan’s stimulus package which has underwhelmed. The yen’s latest rise against the US dollar has prompted a sell-off of equities and the Nikkei closed almost 2 per cent lower. Elsewhere in Asian, markets closed with losses with Shanghai bucking the trend after early decline.

European markets are focused on oil prices and regional earnings. The banks remain a concern and earnings Wednesday showed diversity with London-based HSBC showing a sharp drop in profits but announcing a share buyback; and France’s Societe Generale beating expectations.

Meanwhile, data shows that the UK is on the edge of a recession with the services sector’s PMI revealing contraction in July. Major European indexes are broadly flat.

Wall Street and Toronto are expected to open slightly higher following a weak previous session.
 
  Latest 1 month ago 1 year ago
 
North America (previous session)
US Dow Jones 18,313.77 (-0.49 per cent) +2.03 per cent +4.07 per cent
TSX Composite 14,477.01 (-0.73 per cent) +2.93 per cent +0.06 per cent
 
Europe (at 4.30am ET)
UK FTSE 6,645.03 (-0.01 per cent) +1.02 per cent -0.65 per cent
German DAX 10,149.06 (+0.05 per cent) +3.81 per cent -11.31 per cent
 
Asia (at close)
China CSI 300 3,193.51 (+0.14 per cent) +1.25 per cent -16.60 per cent
Japan Nikkei 16,083.11 (-1.88 per cent) +2.55 per cent -21.73 per cent
 
Other Data (at 4.30am ET)
Oil (Brent) Oil (WTI) Gold Can. Dollar
42.00
(+0.48 per cent)
39.72
(+0.52 per cent)
1371.00
(-0.12 per cent)
U$0.7616
 
Aus. Dollar
U$0.7588

 
China’s sitting on $1 trillion in cash
Chinese firms have built up huge cash reserves as nervous business owners have decided to save not spend. Data compiled by Bloomberg reveals an 18 per cent hike in cash holdings among Chinese firms in the last quarter.

Excluding brokers and banks there is $1 trillion in total and the stockpile has built up faster than economies in the US, Europe and Japan.
Although cash-rich firms have financial stability, what Chinese policymakers really want is for greater investment in order to boost the country’s flagging economy.