After a week which saw the absence of the activity in Chinese markets, a new trend might be full of action. The week started on the negative note as the Asian markets opened up weaker. Last week was mostly dominated by the news related to oil prices and the US treasury yields. This week began with some relief as far as news related to the oil prices is concerned as they witnessed a downward momentum because of the decision of the United States to help meet the supply shortages globally. Previously, the supply shortages were witnessed primarily because of the Iran sanctions.
The United States may exempt some countries from the Iran sanctions next month. This would mean that the countries which are selected by the US would be allowed to import oil from Iran. The US has been pressurizing the companies as well as government to reduce imports from Iran. However, there is a quite possibility that only those nations would be granted exemption which have tried to reduce their imports from Iran.
What Happened to Australian Markets Today?
As expected, the Australian markets witnessed the negative impact on October 8, 2018 because of the pessimism prevailing on the markets globally thanks to the Chinese markets. S&P/ASX200 ended the day at 6100.3 which implies the fall of 85.2 points or 1.4%. Australian markets were also impacted by the unfavorable momentum in the stocks of resources, metals & mining as well as materials. The impacts of reopening of Chinese markets were visible in the beginning of the week as the concerns related to the global trade wars might again come up.
The Australian traders also focused on the data of the US Non-Farm Payrolls which stated that the US economy is all set to experience strong momentum. The report stated the unemployment rate is 3.7% hitting approximately 50-year low. Moreover, the momentum in the wage growth was also positive raising concerns that the Fed might come up with another rate hike in December meeting which would make USD stronger against the currencies of the emerging economies.
Myob Group Limited (ASX: MYO) and Lynas Corporation (ASX: LYC) ended day on the positive note as they advanced 19.128% and 2.801%, respectively. Coming to the losers of the day, Alumina Limited (ASX: AWC) and Beach Energy Limited (ASX: BPT) ended the day by falling 6.885% and 5.924%, respectively. However, Australia and New Zealand Banking Group Limited (ASX: ANZ) also fell by 2.633% as the bank expects that its annual results might get impacted as they need to provide compensation to the customers for the services which were either inadequate or were not made available. However, they also expect other charges as well. The impact of $697 million from the ongoing operations is expected to be felt on its PAT (full year). Additional $127 million hit would also be witnessed in regard to the wealth business which the company unloaded in the previous year to IOOF.
A Look at Chinese markets
The Chinese markets witnessed the downward momentum after investors were back from the holiday. The Chinese central bank yesterday made an announcement that the required reserve ratio for some of the lenders has been reduced by 1%. However, the impact on the equities was not substantial. This rule would come into force from October 15, 2018. According to People Bank of China, they would be releasing 1.2 trillion yuan and out of these 450 billion yuan would be utilized towards the repayment of present medium-term funding facilities.
Even after the liquidity support advanced by the central bank, the markets seem to have ignored that support is moving in the downward direction.
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