Macro Afternoon

See the latest Australian dollar analysis here:

Macro Afternoon

A bath of share price blood here in Asia today with a big selloff across the region following Wall Street’s falls on Friday.  The typical safe havens like Yen and gold have not spiked, given they made most of their gains previously, while oil prices have gained slightly from their overshoot.

The Shanghai Composite finally returned, and in epic style, selling off 8% or 200 points lower to 2739 points! The Hang Seng Index is the only market in the region with a positive result., but only just – up 0.1% to 26354 points, still keeping prices somewhere near the December level:

Japanese share markets were the best relative performers, losing only 1% or so, with the Nikkei 225 closing at 22973 points, still poised here to make a new monthly low. The USDJPY pair gapped a little higher on the typical Monday morning open but has lost most of this to remain in the mid 108s:

The ASX200 fell 1.3% in sympathy with other markets and as expected, closing well under 7000 at 6923 points. The Australian dollar is remarkably steady, stuck right on the 67 handle and poised to break either way going into tomorrows RBA meeting:

Eurostoxx and S&P futures are up slightly despite the Asian selloff , but the four hourly chart of the S&P500 still shows the market is depressed here and potentially ready to crack again:

The economic calendar starts the week with the US ISM Manufacturing print for January.

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Comments

    • The acid from the orange in the skin probably is more protective than the surgical masks people wear.

      I keep meaning to grab a pack of N95s from work.

      Btw – i was talking to a senior from work the other day – he was talking about seeing the preivous government action plans when SARS was a thing. The final stage if it got real bad in Aus was martial law, with people being forced to stay in their homes (not unlike China now)

    • Question is, if the RBA don’t cut tomorrow will $AUD rise or will CoronaVirus + Iron Ore prices cause $AUD to keep falling?

      • RBA won’t cut and the AUD will still be in freefall. RBA (Aussie monetary policy) no longer has any influence on the AUD exchange rate. Hasn’t for a while now.

        • Just transferred it to CurrencyFair and waiting for it to be recognized in their system before trying to exchange it.

        • I transferred Euro the other week. Didn’t get quite as good rate. $USD next. But it seems $AUD will keep falling going forward… But I don’t wanna risk it for the biscuit. Happy to transfer at today’s rate because best in 10 years… Hoping it comes through though .. if $AUD bounces I will be disappointed.

          • Given RBA decision is not until 2.30 pm tomorrow it seems a decent chance you will get the opportunity to exchange the money before then …

          • It depends if CurrencyFair system picks up the money before that, but also.. on Currenfair you need to wait for others to exchange (it’s like peer to leer exchange) so depends on rate you want as to how fast it gets exchanged. Can take a few goes / days to happen.

        • PS: DrSmithy I think wanted me to let him/her or ther know if I had any problems transferring large sums of money via international transfer.

          I have gone through CurrencyFair to get much better rates than the banks would give. In some cases I’m taking 10k+ on large amounts.

          Once the money was sent to CurrencyFair it was easy enough, but I had a lot of hassle accessing my Euros because of the bank updating policies around security. So it was several letters and calls and codes and pins and fobs etc.. then I couldn’t move more than 10,000 Euros in 1 go.

          AIB in Ireland wouldn’t increase the daily limit either. So I had to transfer money over the course of a week and a bit. Real pain but got there in the end.

          For my $USDs the US Bank in NY currency fair uses rejected the first payment because my reference field didn’t contain my full name. I just put the code. So it’s taken a few days to sort. Now it seems to go through fine once I corrected it.

          But of a mess talking to Westpac, a bank in NY and CurrencyFair to try and sort it all out. Of course Westpac charge $25 for each time they get involved. Thieves.

          But apart from all this hoop jumping I think it’s going ok. Hoping to have it all resolved this week. Settlement for me is in about 3 weeks time.

          • darklydrawlMEMBER

            You could consider Ozforex. They are fast and with good rates – certainly much better than the banks.

          • I looked at different options, but ultimately I trusted currencyfair, so that’s why I went with them.

          • Thanks for the detail Gav. As you know I have used CF a lot and never had a hiccup but never moved more than $50K at a time (I always do it in chunks to minimise regret over FX fluctuations). And I also haven’t done it in the last 12 months so sounds like perhaps money laundering refs have made the process slightly more hoop-jumpy.

          • I’m with darkly Gavin … why not Ozforex??? good rates and only delay is the day or 2 it takes for money to move between bank accounts and time zones …

            how many pips extra does CurrencyFair offer??

          • DavidJ in my experience Currencyfair offers only about 30-40 pips off the mid market rate, plus a very nominal fee (like $5 per transfer). You can check on their website at any time, eg right now they will exchange your AUD for 66.64 US cents and the mid market rate is 66.94, no matter the size of your transaction, and no need to ring them and haggle. In my book that is sensational.

      • That is huge. That site is a bit sketchy though and the results don’t always tally with other data sources. I stopped following it a while back. I am pretty sure if you want semi reliable live iron ore spot prices you need to pay for them either through platts or Bloomberg. Otherwise just wait for the end of day results which are a bit more available eg through CommBank if you sign up for daily emails or even MB if you are a member.

  1. TailorTrashMEMBER

    Now this is becoming a mystery……………where are the thoughts of Uncle Xi …..on the great rejuvenation of the Chinese people ………….most unusual

    • It would be funny as hell if he’s picked up a dose of Kung Flu. Even more hilarious if it finished him off.

          • Yes indeed. (My point was really just that it doesn’t make a difference how good your leader is if you start with a hopelessly weak hand.)

            In my view the Art of War is far too heavy on the whole cunning tricks / not fighting / winning indirectly thing. This is probably because the Chinese have over the centuries proved rather sh!t at actually fighting anyone but themselves.

            Slightly less facetiously, it’s because Sun Tzu WAS mostly writing about a context where the main type of war was CIVIL war and China is a bloody hard place to conquer and hold when you are but one faction in a civil war. So all the stratagems make sense in that context. The only problem seems to be when the unsubtle and unsophisticated Westerners turn up, and their way of making war is to find the enemy and attempt to brutally thrash the living sh!t out of it as fast as possible. Which Is very well suited to conquering OTHER PEOPLE’S countries, and very often works a treat, at least for a while.

            So I’m not much of a devotee of the mystical wisdom of Sun Tzu. Give me Machiavelli and some B2 bombers any day.

    • TailorTrashMEMBER

      I misspelt the above ……….meant to say ……………..” the great resuscitation of the Chinese people “

      ……OK ……..knock on my door ……..I may not be here to morrow ………….I used to live in a place called Australia……….

  2. I will be standing for Greens Leader.

    Thank you Richard for your leadership and service to Aust.

    I look forward to talking with my colleagues about how we share leadership across the House & Senate as we fight the climate emergency and inequality with a Green New Deal.

    https://twitter.com/AdamBandt/status/1224139807665688576

    Fark. Vibrants were imported to install pink batts. Now vibrants will be imported to install solar panels.

    • Counting chickens, hold the snicker – injecting into the “financial system” for a patient on life support. Although now that you raise the matter this could be a big shift to consumption (basic needs) rather than misallocated investment. If so , they don’t need more dwellings, belt nor road.

      • Sounds like mostly propping up the financial system with a side serve of ramping up mask and test kit production. Maybe stop a few overindebted banks and local govts from going bust. Doesn’t exactly sound like New Boom stuff.

      • Some seem to not get it, without China that 30T+ the US injected would have gone splat. So if this time China is not there good luck with that … and some are worried about bush fires, international students, vibrants, and viruses ….

      • Well we know they are looking for something to blame. May as well be drought, bushfires and Chinese Corona Virus… Not the ongoing mismanagement of the economy. Complete negligence of global warming or it’s causes or the business as usual population ponzi that was always going to hit a natural limit.

        But they really should try blaming Labor and possibly The Greens for this mess. I blame Richard for leaving the Greens.

  3. TailorTrashMEMBER

    Straya closed its borders to China ……to stop a virus ……if it was to stop Chinese overwhelming the country …..or the PLA …….imagine the outrage …..
    …….is this just a teensey teensy little tremor of national assertion ………….sad thing is don’t see it lasting …………

    • Mining BoganMEMBER

      By the people maybe, not the government. They really didn’t want to stop flights. They were forced into it.

      • Flights from China haven’t exactly stopped:

        Cruise ship stuck at sea after ‘dumb, greedy’ stop in Hong Kong amid coronavirus fears

        http://www.abc.net.au/news/2020-02-03/adelaide-couple-stuck-on-cruise-ship-refused-entry-to-manila/11923620

        When you read past the outrage:

        “Meanwhile, a man on board a China Southern flight from Guangzhou to Adelaide that landed today was reportedly suffering from a fever and had to be removed from the plane by specialist staff.” Today? Correct, Monday 3rd February. So no, flights from China have not appeared to have stopped.

        • Haha, everyone swallowed the fake news hook line and sinker.

          It’s just like when they clamped down on migration last year. And It fell, to all time highs.

        • HadronCollisionMEMBER

          No mention of his nationality or residency status
          If he’s a PR Or citizen they’re allowed in

          There are directives around self isolation etc

          • @Ermo

            Someone needs to sharpen them knives. They’re pretty fvcking blunt from the last couple of stabbings. Call it ‘paying down the knife sharpening debt’…

        • Flights haven’t stopped, but I think you can only get on them if you’re an Aus citizen, perm resident or (giant loophole) “immediate family member” of one of those.

          Maybe the sick guy was called Dazza Bogan Vegemite and had only been in Guangzhou trying to buy uggboots or something

    • Petty 🙂

      I noticed the same in Glen Waverley today. Plenty of spare parking spots in Kingsway mid afternoon.

    • Have also heard it was the empty in Box Hill and Glen Waverley over Chinese New Year – normally these places are especially busy during this period. Other anectdata from asian friends include lower numbers gambling at Crown, as well as drops and cancellations in basketball and badminton court bookings.

      With Qantas banning flights from China until the end of March, I expect there will also be some impact on the auction market.

    • Oooohhh, mamma! At how inept SmoCorona is, I wouldn’t put it past him to try to call their bluff! And what a fvcking shïtshow will that turn out to be. And Labour will still lose. And the greens will still be in the corner tossing the pink salad…

  4. boohoo WA about to have its only commodity destroyed, maybe we can wake up and start investing in some manufacturing to use all this iron ore and boost jobs as well.

    • ErmingtonPlumbingMEMBER

      Not while both major parties are embracing Thatcherite “There is no alternative” global “Free Market” Capitalism.
      Many argue that this Capitalism has lifted millions out of poverty (it’s more likely technology)
      But So What.
      Standards of living improved under Slavery between 1750 and 1850.
      Does that mean Slavery is a “Good thing” or the best path?
      https://youtu.be/eWcsFIxOUKE

  5. With China preoccupied with the virus, I wonder if the US or other surrounding countries are scheming to take over those islands in the South China Sea. You know, knock them out while they’re down?