Markets rebound, led by energy sector

NZD jumps on improved market sentiment; positive oil price movement snaps losing streak; Aussie labour market improvements

Currencies

NZD jumps on improved market sentiment; positive oil price movement snaps losing streak; Aussie labour market improvements

15th Jan 16, 8:15am by Kymberly Martin

By Kymberly Martin

The NOK has outperformed as the WTI price has rebounded overnight. The NZD has rebounded from intra-night lows, currently trading at 0.6480.

The WTI oil price has rebounded by around 2.50% overnight, helping support a 1.5% gain in the S&P500, led by energy companies. It has also underpinned the NOK which has gained a further 0.5% against the USD. However, it is still down almost 50% since mid-2014, as the global oil price has plunged.

Overnight, in choppy trading, the USD had strengthened, while the EUR sits a little lower after the release of ECB Minutes. The EUR/USD trades at 1.0850 this morning.

The GBP gained a bit of a boost after the Bank of England’s meeting early this morning. As widely expected, there was no policy change. However, some had anticipated that committee member McCafferty would abort his call for a rate hike. Instead the vote remained at 8-1. The GBP/USD traded up from last evening lows near 1.4360 to around 1.4410 currently.

The AUD sits a little higher this morning. Most of the gains have occurred early this morning as equities and the oil price have rebounded, rather than as a direct result of yesterday’s AU employment report. The report did beat expectations.

Putting aside recent data volatility, it is clear the AU labour market has continued to improve in trend terms. Our NAB colleagues calculate that depending on which measure you focus on, AU employment growth is currently running between 2.0-2.7% y/y. This is more than sufficient to put downward pressure on the unemployment rate. The AUD/USD currently trades above 0.6980.

The NZD/USD has also rebounded in the early hours of this morning. After finding support just below 0.6430 (the mid-Nov lows) it has now traded back up to 0.6480.

It is a relatively low-key agenda for local data releases today. However, there is a good smattering of US data releases with potential to drive markets tonight, including Dec advance retails sales and the US Empire Manufacturing index.

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Kymberly Martin is on the BNZ Research team. All its research is available here.

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5 Comments

by Stephen Hulme | 15th Jan 16, 10:00am 1452805225

The WTI oil price has rebounded by around 2.50% overnight, helping support a 1.5% gain in the S&P500, led by energy companies

Or was it St. Louis Fed President James Bullard's sticksave comments? Read more and more

by Afewknowthetruth | 15th Jan 16, 1:50pm 1452819052

Meanwhile, the Baltic Dry Index, a proxy for global trade, hit a new low yesterday 'As Global Trade Grinds To A Standstill'.

http://theeconomiccollapseblog.com/archives/lowest-ever-the-baltic-dry-…

by David Chaston | 15th Jan 16, 2:29pm 1452821371

That is just plain wrong. The BDI used to be a proxy for global trade, but cargoes have moved on, shipping has moved on, and the high-value end of the global trade volumes have moved on as well. The BDI is now a measure of excess capacity of old non-PANAMAX shipping demand. It was a proxy in the 1980s, but no more.

The twist has happened because older vessels were never actually taken out of service when new large-capacity ones were built, and a huge number of the new large ones have been built. They can compete because their unit costs are so much lower than the older vessels. All owners want higher prices, so even the owners of the new large vessels complain. But they will survive. Ship owners complaining is one of life's certainties.

by Afewknowthetruth | 15th Jan 16, 9:14pm 1452845653

'The WTI oil price has rebounded by around 2.50% overnight, helping support a 1.5% gain in the S&P500, led by energy companies. It has also underpinned the NOK which has gained a further 0.5% against the USD. However, it is still down almost 50% since mid-2014, as the global oil price has plunged.'

Well, that was short-lived. Friday evening NZ time: WTI $30.34, down 2.76%. And Brent $30.37.

'Slowing investment and construction in China, the world’s biggest energy user, is “sending an enormous deflationary impetus through to the world, and that is a significant part of what’s happening in this oil-price collapse,” Turner, former chairman of the U.K. Financial Services Authority, said in an interview with Bloomberg Television/'

.http://www.zerohedge.com/news/2016-01-14/real-price-oil-below-17

by mandalay | 16th Jan 16, 10:58am 1452895086

Amazing what a difference a day makes in the market!
http://www.interest.co.nz/news/79537/risk-aversion-main-driver-oil-and-…