Spreadbetters
saw the somber mood extending into Europe, forecasting Britain's FTSE
(.FTSE), Germany's DAX (.GDAXI) and France's CAC (.FCHI) to open flat to
a touch lower.
The
People's Bank of China (PBOC) on Monday continued guiding its currency
lower, setting the yuan/dollar official midpoint at its weakest since
July 2011. Beijing's introduction of a yuan rate index against a basket
of peers - seen as a move that traders said would depeg the renminbi
from the greenback over time - further weighed on the yuan.
China's
decision to loosen its grip on the yuan and allow slow but steady
depreciation in recent weeks had added to concerns that the economy may
be more fragile than expected.
MSCI's
broadest index of Asia-Pacific shares outside Japan hit a 2-1/2-month
low and was last down 1.3 percent. Japan's Nikkei (.N225) slumped 2.1
percent as falling commodities hit energy and trading companies' shares.
South Korea's Kospi (.KS11) retreated 1.1 percent and Australian shares (.AXJO) dropped 1.8 percent.
Data
on Saturday showed factory output growth in China accelerated to a
5-month high in November, while retail sales rose at an annual 11.2
percent pace - the strongest this year. (ECONCN)While most of the region's investors mostly looked past better-than-expected indicators, China proved the exception with volatile Shanghai stocks (.SSEC) paring earlier losses and gaining 0.5 percent.
On Friday, the Dow (.DJI) sank 1.8 percent and the S&P 500 (.SPX) lost 1.9 percent as plunging crude oil prices added to fears of a possible spike in volatility if the Federal Reserve raises interest rates on Wednesday for the first time in nearly a decade, as widely expected.
"It's fair to say that equities are going to be truly tested over the coming four days, and the Fed will be a catalyst for volatility in the lead up to Thursday," wrote Evan Lucas, market strategist at IG in Melbourne.
A U.S. rate hike would be a first step toward normalizing monetary conditions after an extended period of loose policy, which had helped shore up riskier assets.
Oil prices continued their freefall after the International Energy Agency (IEA) warned that global oversupply could worsen next year. Brent crude (LCOc1) fell below $38 a barrel for the first time in seven years on Friday and was last down 0.6 percent at $37.70.
In currencies, the dollar was little changed at 121.13 yen (JPY=) after shedding 0.5 percent on Friday, when it stooped to a near 6-week low of 120.585. The euro was steady at $1.0965 (EUR=) after gaining about 0.4 percent on Friday.
The greenback stalled as long-dated U.S. Treasury yields slumped to multi-week lows on Friday as government debt attracted bids for safe havens.
The forex market also kept an eye on the Chinese currency after Beijing, in a move seen by some as a green-light for more devaluation, late on Friday launched a new trade-weighted yuan exchange rate index. Beijing said it was intended to discourage investors from exclusively tracking the yuan's fluctuations against the greenback.
"While some will see this as cover for currency devaluation, we suspect the goal is to keep the renminbi's value broadly stable rather than be compelled to have it follow the dollar higher, as it has over the past couple of years," Capital Economics said in a note.
"But the haphazard way in which information is dribbling out is doing nothing to generate confidence."
Spot
yuan (CNY=CFXS) fell to as low as 6.4665 to the dollar, its lowest
since mid-2011, taking its losses far this year to about 4 percent.
By: Shinichi Saoshiro.
Editing: Eric Meijer.
Market Reacts To Pravin Gordhan Being Reinstated As S.A Finance Minister.
This comes after Zuma sacked Nhlanhla Nene from the ministry late on Wednesday, and replaced him with the relatively unknown lawmaker David van Rooyen.
The rand which hit a record low breaching 16 to the dollar on Friday recovered to trade at 15.47 on the news of Gordhan's appointment.
ZAR back to 15.1000. Thin Asian markets.Let's
hope the recovery is sustained, bond yields cruise lower and JSE
rebounds. They probably will.
By: George Glynos.
All eyes will now be on the bond market where yields reached their highest levels in seven years and the JSE which posted significant losses following the announcement by Zuma to replace the Minister of Finance. According to JSE CEO Nicky Newton-King, "Investors, ranging from individual retirees to huge pension funds, have seen the value of their holdings plummet. Businesses already under pressure now face increases coming from rising borrowing costs and a weaker Rand which devalued from R14.53 to R15.89 (9.36%) against the USD and from R15.94 to R17.45 (9.47%) against the EUR in the two subsequent days.
"Thursday 10 and Friday 11 December 201 saw exceptional trading volumes across most platforms of the JSE:
- The FTSE/JSE Financial15 Index (FINI) dropped 13.36% from 15 600 to 13 515
- The FTSE/JSE Banks Index lost 18.54% dropping from 6 556 to 5 340
- The FTSE/JSE All Share Index (ALSI) dropped 1 456 points in those two days, closing at 48 068 on Friday, down 2.94%
- The FTSE/JSE Top 40 Index shed 987 points over the same period, closing at 43 558 on Friday
- The entire market cap fell R169.6bn from R11.35tr to R11.18tr (1.49%).
By: David Shapiro.
Google Wallet Now Lets You Text Money to Your Contacts.
After
Wallet was replaced by Android Pay as Google’s mobile payment
framework, it remained as the company’s platform to send money to
people.
Up until now, Google Wallet required an email address to send money to a contact, but now an update
lets you do it through text message. Anyone in your contact list with a
phone number can receive a text message with a secure link. All the
recipient has to do is enter their debit card to claim the money and
they’ll see it added to their bank account almost instantly.
Peer-to-peer
mobile payments is already a crowded market, with the likes of Venmo,
Snapcash, Paypal.Me, and even Facebook Messenger offering similar
services. Google Wallet has been around for a while, and the new text
integration will certainly make it easier for people to send money to
their contacts.
It’s
unclear how secure the link is and for how long the link will remain
active. We’ve reached out to Google for comment and will update this
post when we hear back.
Recently,
Google Wallet added improved contact suggestions, showing you contacts
you often send money to first; a feature that lets you lock the app with
a tap of a button; and the option to add a second bank account. The
company brought its peer-to-peer mobile payments service to iOS in September.
Hopefully
the company’s branding change doesn’t confuse too many people with
Android Pay, and perhaps the ability to send money through texts may
push more people to favor Google Wallet over other services.
The update is only available in the U.S., and is rolling out on Google Play and in the App Store in the next few days.
By: Julian Chokkattu.
Japan firms keep bullish capex plans, gloomy on outlook.
"Declines in oil prices and upbeat capital spending plans are among a few positive factors. Other than that there seems to be little in the way of bright spots in this data," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
The headline index gauging big manufacturers' sentiment was unchanged from three months ago at plus 12, the tankan showed, contrary to market expectations of a slight deterioration.
Big non-manufacturers' sentiment was also steady at a 24-year high of plus 25, as hotels and retailers benefited from a surge in overseas tourists shopping for goods made cheap by a weak yen.
Despite overseas headwinds, big companies expect to increase capital expenditure by 10.8 percent in the current fiscal year, the survey found, largely unchanged from the previous survey and roughly in line with market forecasts.
The data adds to growing signs companies will finally direct some of their record profits to wages and capital expenditure, which are key to the success of premier Shinzo Abe's stimulus policies aimed at ending nearly two decades of economic stagnation.
The data also heightens the chance the BOJ will hold off on expanding its massive stimulus program when it meets for a two-day rate review ending on Friday, analysts say.
The survey highlighted concerns many firms had on the economic outlook, with current strong profits driven more by temporary windfalls such as the weak yen and low oil costs, rather than growing real demand.
Both big manufacturers and non-manufacturers expect business conditions to worsen in the coming three months, the survey showed, highlighting fears that China's slowdown and the moderating pace of the yen's decline could hurt exports.
Many firms also expect profit margins to shrink, complaining of a supply glut at home and abroad, keeping policymakers under pressure to reignite flagging growth.
"Deterioration in firms' outlook is the focus of today's data," said Junko Nishioka, chief economist at Sumitomo Mitsui Banking. "The economy lacks recovery momentum," she said, noting the weak outlook would keep alive market expectations of further BOJ easing.
Japan narrowly dodged recession in the third quarter as capital expenditure rose more than initially expected, but analysts expect any rebound in growth to be modest.
The BOJ has said it will stand pat unless a severe slowdown in emerging markets hurts corporate profits, and in so doing discourages big businesses from raising wages and capital expenditure.
The government plans to compile a supplementary budget of around 3.5 trillion yen ($28.7 billion), which will modestly boost growth but not until around April, analysts say.
By:
Reporting: Leika Kihara and Tetsushi Kajimoto.
Editing: Eric Meijer.
Review: Emerging Market Formulations & Research Unit, Flagship Records.
For The #FacebookTeam.