Equities sell-off
As markets digest the conclusion of the BoJ’s Outlook Report and Monetary Policy decision (we preview that here), major equity benchmarks have exhibited some moderate risk-off in the absence of normal liquidity with overall volumes visibly lower..
ASX Cash is down -0.45%, while S&P and Nasdaq futures have pulled back ~0.4% from all-time highs. In a similar vein, HSI trades 1.22% lower and CSI falls away -0.6% at time of writing. Nikkei dives 1.2% adverse to JPY strength. MSCI Emerging Markets also tracks lower to the tune of 1.6%.
There’s not exactly much market-specific news. But if we were to hazard a guess, the apparent outbreak of a new strain of Coronavirus which has infected 200 with four fatalities, might be some cause for concern leading into Chinese New Year on Friday, a period when cross-border travelling is plentiful.
Mild risk-off moves in FX
The souring of risk sentiment is mildly evident in G10 FX with volatility marginally higher across the boards. USDJPY dropped back into 110 after starting the day at 110.15, as overnight option implied volatility shot up to 4.14%. This means our initial range assessment of USDJPY should be widened, with +/-26bps the suggested one-day upside/downside movement on 68% confidence.
AUDUSD and NZDUSD appear to be trading close to January lows, having been largely range-bound and insensitive to the last couple of weeks of risk-on. Both commodity currencies are feeling the pinch of a general sell-off across EM.
Better than expected PPI growth is being largely ignored in USDKRW with the Korean Won weaker by 0.6%. In fact, inflows into USD is the main driver of price action across the EM space at the present time. USDBRL +0.7%, USDCNH +0.5% and USDZAR +0.4% top the list of outperformers.
Movers and shakers in the ASX
Taking stock of ASX winners and losers; Crude, Coppper and Natgas sensitive stocks are feeling the pinch with two hours left in trading, while positive gains in Gold (+0.35%) boost the likes of Dacian (DCN).
ASX 200.
