Asian Stocks Broadly Lower as Risk Aversion Intensifies

Market Reviews

Japanese yen is the strongest one for today, followed by Swiss franc and US dollar. Australian dollar remains the weakest one for today, followed by New Zealand dollar. Canadian dollar remains the third weakest, as it was sold off sharply after the Bank of Canada expressed its concern on “oil price shock” in the statement overnight.

The British pound is one of the weakest currency this week, just next to risk aversion pressured commodity currencies. Economists forecast that the pound would appreciate 3.5% if the Brexit deal is approved next week. On the other hand, parliamentary rejection of the Brexit deal could trigger selloff by -2.75%.

Risk aversion intensifies again on stock markets. Hong Kong HSI lost 2.62%. Nikkei declined 2.13%. China Shanghai SSE fell 1.28%. Singapore Strait Times closed down 1.13%.

The Bank of Canada held its benchmark interest rate steady at 1.75% on Wednesday as low oil prices and slowing economic momentum prompted officials to strike a more cautious tone, casting fresh doubts on the chances of a rate increase in January. The central bank said interest rates will need to rise to a neutral range, currently estimated around 2.5% to 3.5%, to keep inflation on track. The pace of future rate rises will depend on a number of factors, including the effect of higher rates on consumption and housing, and developments in global trade policy.

After the data on the Australian GDP released on the eve, which turned out to be well below the average forecast, data on the trade balance were published today, which also fell short of expectations. Australia trade surplus came in smaller than expected at AUD 2.32B in October. Retail sales rose 0.3% mom in October, matched expectations.