Tuesday: 5 Things The Markets Are Talking About

China intervenes to support stocks, oil shrugs off Middle-East tensions and euro-area inflation is stuck near zero. Here are some of the things people in markets are talking about today.

1. China stops rout

China’s CSI 300 Index closed 0.3 percent higher after falls of more than 2 percent were erased in a late-session rally. According to people familiar with the matter, state-controlled funds bought equities and the securities regulator signaled that a selling ban for major investors which was due to expire this week may be extended. The People’s Bank of China injected 130 billion yuan ($19.9 billion) of seven-day money into the economy using reverse repos, the largest amount since September. The yuan rebounded from a five-year low.

2. Oil

This time it’s different. As Middle-East tensions rise, the price of oil is going nowhere. West Texas Intermediate for February delivery dropped 2 cents to $36.74 a barrel on the New York Mercantile Exchange at 10:58 a.m. London time. With no relief in sight for oil exporting nations, there may be more bad news from the bond market as they try to plug holes in their budgets with Mashreq Capital DIFC Ltd. predicting Gulf states will soon be paying an extra 50 to 100 basis points above current yields to sell bonds.

3. Euro-area inflation

Euro-area inflation for December was weaker than economists expected, rising an annual 0.2 percent. The euro fell 0.5 percent to $1.0763 at 11:15 a.m. London time. Stubbornly low inflation in the common currency area may add pressure on the European Central Bank to act further as the ECB’s 2 percent target seems as distant as ever.

4. German, Spanish unemployment

Although inflation remains muted, unemployment in both Spain and Germany fell more than expected according to figures released this morning. In Spain social security sign-ups – a measure of new staff hiring – rose by 85,314, the biggest increase on record and in Germany the unemployment rate remained at 6.3 percent, the lowest since reunification.

5. VW sued by U.S., auto sales due

The Justice Department sued Volkswagen AG in relation to the emissions-test cheating devices the company installed in its diesel cars. Volkswagen shares were 5.7 percent lower at 11:15 a.m. London time. Also in U.S. auto news, domestic vehicle sales for December are due to be released later today, with expectations for total sales of 18 million vehicles, a small drop from November’s 18.05 million.

Forex heatmap

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell