INGOT Brokers AU | Asian market report (2017-06-21)

Asian market report (2017-06-21)

Equities across the Asia were in the red impacted by the sharp decline in oil prices, which reached its seven months low, that spilled over from the US trading session, while China was in the green over Morgan Stanley Capital International decision to include Chinese A-stocks in the MSCI’s emerging-market index.

Oil futures dropped to seven months lows on Tuesday and falling by 2 percent as production continue to rise in Libya and the United States pressured price and supported the bullish market sentiment.

News in Saudi Arabia that Crown Prince Mohammed bin Salman had replaced his cousin to make him the next ruler of the largest oil producing country in the world also adding to market uncertainty.

The Japanese Yen strengthened against the US Dollar as investor move in favor of the safe haven over the uncertainty in the oil market, while the Australian Dollar is falling sharply against its US counterpart and the Chinese Yuan fell from its nine months high after the Morgan Stanley Capital International decision to include Chinese A-stocks in the MSCI’s emerging-market index.

Meanwhile in China, shares traded higher over bullish sentiment from the inclusion of Chinese A-stocks in the MSCI’s emerging-market index that could benefit its market with more capital in-flows in the futures, counterbalancing the decline in the energy sector.

Morgan Stanley Capital International decision was to include 222 A-stock companies to its highly followed emerging market index in 2018, but this decision would reduce other countries’ weight in the index.

The Chinese stock market index Shanghai Composite gained 0.52 percent or 16.20 points to settle at 3,156.21 slightly below the session’s high

But the concerns of the tight liquidity conditions in addition to that the Chinese A-shares are overvalued when compared with global shares that are included in MSCI’s emerging-market index still remains.

In Japan, the stock market ended lower over the slight recovery in the Japanese Yen, which weighted on the country’s major exporters, as well as the spill over from the falling oil prices.

The fall was despite the bullish sentiment regarding the economic recovery, in time where board members of the Bank of Japan said that the country's economic recovery continues but its pace has been somewhat delayed and the Bank’s minutes indicated that considerable uncertainty in overseas economies and downside risks to Japanese economic activity still remains.

Japanese stock market index fell by 92.62 points or 0.45 percent ending at 20,138.79.

Australian stock market witnessed it worst trading day since November 2016 wiping nearly 27 billion Dollars of wealth in the share market and its gains since the beginning of the year, despite the weakening Australian Dollar.

The sharp decline in the oil market as well as the falling iron prices led the energy and mining sectors lower, in time where the banking sector in under pressure from Moody’s downgrading the credit rating for Australian banks thus pushing the countries’’ major sectors lower.

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