Trade of the Day: Stocks and futures drop ahead of Fed and Dec 15 deadline; US Treasuries, gold firm; oil weak
Quote of the Day: “There are signs that pork price inflation may be close to a peak. Pork prices rose only modestly in m/m terms last month and China’s pig herd expanded for the first time in a year. Easing food inflation and muted demand-side price pressures should strengthen the case for further monetary easing,” said Julian Evans-Pritchard, economist at Capital Economics. His comments came after China’s consumer inflation climbed to nearly eight-year peaks in November as pork prices doubled. The data were published earlier on Tuesday
Stock of the day: Construction firm Central Holding Group fell 8% to HK$7.18 per share after an SFC investigation found there to be a high concentration of shareholding with only 5.6% held by other shareholders.
Number of the Day:. 1.39 trillion. New yuan loans made in November by Chinese banks. This beat market expectations of 1.2 trillion yuan of loans.
Tip of the Day: “India’s non-bank financial companies (NBFCs) will look increasingly to offshore financing in 2020 as local funding conditions are likely to remain under pressure,” said Fitch Ratings in a report published on Tuesday. “The offshore route would allow better-placed NBFCs to further diversify funding sources after fairly volatile domestic liquidity conditions over the past year, enabling them to capture relative funding-cost benefits and exploit growth opportunities.”
Asian markets dumped risky assets ahead of two key central bank meetings with the December 15 deadline for U.S. tariffs on Chinese imports also looming. MSCI Asia-Pacific index ex-Japan dipped 0.2% while Japan’s Nikkei Average edged down 0.1%. The Hang Seng index was down 0.2% with consumer, healthcare and property sectors providing the main drag.
In Shanghai, the Postal Savings Bank of China trading debut was lukewarm after the biggest share offering in China since 2015. Shares edged up to 5.61 yuan after pricing at 5.50 yuan in an offering that raised 28.5 billion yuan.
Fed to keep rates unchanged at 1.50-1.75% at the December meeting and guide toward a hold in policy. Financial markets are keen to hear from the US Federal Reserve after its meeting on Dec 10-11 as the expectation is the central bank will hold rates for the foreseeable future. “Currently, they are suggesting the next move is a rate hike in 2021 and we suspect this will remain the case,” James Knightley, chief international economist at ING said in preview.
Financial markets are also awaiting Christine Lagarde’s comments when she chairs her first meeting as President of the European Central Bank’s governing council on Thursday. Those attending the press conference that follows the meeting will be keen to hear her plans to launch the central bank’s second strategic review in its 20-year history.