Daily Management Review

In a Year Dominated by Fed Rate and China Sowdown, Oil and Asia Shares End Year on Subdued Note


12/31/2015




In a Year Dominated by Fed Rate and China Sowdown, Oil and Asia Shares End Year on Subdued Note
Amidst a renewed slide in oil prices that sapped sentiment and with experts predicting this baleful trend has every signs of lingering into 2016, the Asian share markets looked set to end a rough, volatile year on a subdued note on Thursday.
 
With financial spreadbetters expecting FTSE and France's CAC40 FCHI to not perform well there is expected to be a muted end to the year in the European markets as well.
 
The currencies of commodity-rich countries including the Russian rouble, Canadian dollar, Norwegian crown, Brazilian real and Mexican peso have been  hit hard in 2015 by the relentless decline in oil prices, which have slumped as much as 35 percent this year.
 
Cheaper fuel is a disinflationary force that reinforces bets on loose monetary policy in Europe, Japan and China while it acts as a booster for consumer spending power in much of the developed world. This, while the Federal Reserve proceeds with glacial U.S. tightening.
 
Oil prices ended 2015 much the same way as they had begun - under pressure. After an unusual build in U.S. stockpiles and signs Saudi Arabia will keep adding to the global oil glut, Brent crude skidded toward 11-year lows.
 
"Ever get the feeling that you've been here before? It is the end of another year with oil prices very weak - having fallen by around a third again since the summer - China fears are at the fore and everyone is still talking about the Fed," wondered analysts at National Australia Bank in a note to clients.
After a drop of 3 percent the previous session, U.S. crude futures CLc1 gained 0.2 percent to reach $36.67 a barrel. After a 3.5 percent drop in the previous session, Brent crude LCOc1 rebounded 0.4 percent to $36.60. It's set for a slump of 36 percent for 2015.
 
For most commodity currencies, this was bad news. Against the Russian rouble, the dollar hit a more than one-year high and clocked its highest in at least 13 years against the Norwegian crown.
 
The Argentinian peso and the Brazilian real  were at the top among the five worst-performing widely-trade currencies this year with losses of more than 30 percent versus the dollar.
 
There were losses of more than 18 percent against the dollar for the South African rand, the Turkish lira  and the Russian rouble.
 
Among Asia Pacific currencies, the Australian and New Zealand dollars have had the biggest losses. There was a loss of nearly 11 percent this year for the Aussie dollar which ended at $0.7296. the New Zealand dollar declined 12.3 percent in 2015 to clock $0.6845.
 
With a loss of 4.7 percent against the dollar, the Chinese yuan is heading for a record yearly loss after further weakening this week, driven by the typical year-end increase in demand for U.S. dollars in China's foreign exchange market.
 
"China and the United States will continue their monetary policies' tones in 2016, which would boost the dollar and exert downward pressure on the yuan," said a dealer at an Asian bank in Shanghai.
 
(Source:www.reuters.com) 






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