Stormy Weather
Dark clouds hang over Asia Pacific share markets this morning after a wild and stormy night’s trading. Record inventory levels produced a further slide in oil prices, fanning the flames of a Greek inspired European share sell off. Local jobs data is unlikely to ease the pressure, and all sectors are forecast to open down this morning.
While the triggers for selling are evident, the market logic is not. Lower energy prices are a rational market positive, but mounting dismay at the lack of a Santa Claus rally has investors hitting the panic button. Fears about global growth prospects are weighing. Over the past week, strong US performances have offset weakness in Asia and Europe. An American capitulation overnight means bulls have nothing to lean on, and a rout in Asia Pacific shares is on the cards.
Expectations that 15,000 new Australian jobs were created in November would see the unemployment rate rise slightly. However, the unforgiving market mood may mean even a surprise surge in jobs will do little to calm the turmoil. Next week’s futures expiry may be the end of liquidity for the year, and institutional investors are likely to act while they can, adding to the downdraft.
For further comment from Michael McCarthy at CMC Markets please call 02 8221 2135.
Frequently Asked Questions about this Article…
Asia Pacific share markets are facing volatility due to a combination of factors, including a significant drop in oil prices and a sell-off in European shares inspired by concerns over Greece. These elements are contributing to a stormy trading environment.
Lower energy prices are generally seen as a positive for the market because they can reduce costs for businesses and consumers. However, in the current climate, the drop in oil prices is adding to investor anxiety, contributing to market volatility.
The absence of a Santa Claus rally, which is typically a year-end market boost, is attributed to investor concerns over global growth prospects and the recent downturns in Asia and Europe, despite strong performances in the US.
The US market's performance has been a stabilizing factor amid weaknesses in Asia and Europe. However, a recent downturn in the US market means that Asia Pacific shares may face increased pressure without this support.
It is expected that 15,000 new Australian jobs were created in November, which could slightly raise the unemployment rate. However, given the current market mood, even positive job data may not be enough to calm investor fears.
Institutional investors may choose to act before the year's end due to the upcoming futures expiry, which could signal the end of liquidity for the year. This urgency may contribute to further market downturns.
Concerns about global growth prospects are a significant factor weighing on investor sentiment, leading to increased market volatility and a lack of confidence in future economic stability.
Investors can stay informed by following market commentary from experts like Michael McCarthy at CMC Markets, who provide insights and analysis on current market conditions. For further comment, you can contact him at 02 8221 2135.
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