AUD/USD hit 3-month bottom

The Australian dollar is again trading in red territory today, hitting a three-month low against USD, as the greenback found support after the crucial NFP release.

The AUD/USD returned to losses on Friday, paring all the previous gains and trading below the $0.70 handle.

The aussie was down 0.42% at $0.6982 against the greenback, after hitting an intraday low of $0.6966 - a level last seen in September.

The bullish sentiment towards the US dollar took center stage after strong American employment figures, which in return weakened the aussie.

American employers hired an additional 292,000 workers in December, blasting past the 200,000 increase markets had been anticipating, while the unemployment rate held at the post-recession low of 5% for a third month in a row.

Economists praised Friday’s job figures. "Wow, what a report. The consistent strength in job growth makes up for the apparent weakness in other economic data. It is the main reason the Federal Reserve has begun tightening policy and will continue to nudge rates up over the course of this year," James Marple, senior economist at TD Economics, said in a note.

"As long as job growth remains above trend, its bias will be toward tightening, albeit very gradually unless inflation rears its head," Marple added.

Also, markets digested Australian retail sales for November, which declined from an upwardly revised 0.6% to 0.4% month-on-month. Meanwhile in the previous session, the Australian trade deficit narrowed from 3.247 million AUD to 2.906 million AUD. Also, Australian building approvals plummeted from 3.3%to -12.7% month-on-month, with the yearly print also deteriorating sharply from12.6% to -8.4%.

European stocks tumble

All European indices fell sharply on Thursday as most declined more than 2%.

The German leading index Dax lost shortly after the start of the session 2.9% and fell below 10,000 points to 9913 points. This happens for the first time since mid-October.

The biggest losers in Dax group are shares of export-oriented automakers. 

BMW recorded a decline of 4.3%. Shares of Volkswagen and Daimler fell with 3.9%. Merck shares reported a decline of 1.2%, Henkel dropped with 1.4%, while K + S lost 1.4% of its value.

MDax fell with  2.3% to 19,524 points. TecDax lost 2.8% of its value and reached 1737 points. Euro-Stoxx-50 decreased by 2.5% to 3063 points.

In Paris CAC 40 fell by 2.57% and reached 4365.23 points, while London's FTSE 100 tumbled 2.36% to 5930.06 points.

Oil price fell to a new 11-year low

Oil prices fell to new lows after at the beginning of the week recorded a slight increase. Brent crude is trading below $35a barrel, its lowest value in 11 years.

Brent crude sank by 4.2% to $34.88 a barrel, surpassing its late December fall, and taking the price to its lowest level since 1 July 2004. The price of US crude dropped 3.3% to $34.77 a barrel.

The sharp falls followed a short-lived rally on Monday after Saudi Arabia broke diplomatic ties with Iran.

Analysts said fears over the worsening relations between Saudi Arabia and Iran, which had initially raised concerns about possible supply disruptions and boosted the oil price, had now been overtaken by pessimism over oil cartel Opec ever agreeing on a production ceiling.

How low?

Historically, Opec has cut production to support prices. But led by Saudi Arabia, by far the group's most powerful member, the group has resolutely refused to trim supply this time.

Rising tensions over Saudi Arabia's execution of Shia cleric Sheikh Nimr al-Nimr mean that any agreement is now deemed less likely than ever.

"With relations between Opec kingpins Saudi Arabia and Iran at a historic low point, it solidifies an already unlikely scenario that Opec might cut output," said Barclays analyst Alia Moubayed.

Since mid-2014, oil prices have slumped 70% mainly because of oversupply. This in turn is largely due to US shale oil flooding the market.

At the same time, demand has fallen because of a slowdown in economic growth in China and Europe.

Iranian oil exports are also expected to rise later this year once Western sanctions against Tehran for its nuclear programme are lifted, increasing the oversupply of oil.

Opec is hoping that refusing to cut production will help to drive US shale producers out of business, believing that they will fall victim to lower prices long before its own members, and has forecast that prices will recover to $70 a barrel by 2020.

Goldman Sachs has warned that oil prices could go as low a $20 a barrel, but most analysts are expecting the price to stabilise inthe second half of the year as supply from non-Opec nations slows and demand remains relatively robust.

China may restrict stock sales to stem falls

The decline in the Chinese shares continued today after Monday trade was halted because of a collapse of 5% of the stock exchanges. The benchmark Shanghai Composte lost 1.5% to 3,246.61 points, while the Hang Seng ended the day with 0.8 percent down to 21,168.81 points. Monday's suspension of trading led to a global equities sell-off, but today Chinese shares extended losses in a volatile session.

The Shanghai Composite fell 0.3% to close at 3,287.71 points, although it had opened more than 3% lower.

Hong Kong's Hang Seng index also fluctuated through the day, and ended 0.7% lower at 21,188.72.

Trading in Shanghai was suspended early on Monday under a new rule designed to limit dramatic falls in markets.

But regulators said on Tuesday they may restrict stock sales to stem falls.

The China Securities Regulatory Commission said it would consider restricting the proportion of shares that major shareholders could sell during a given period of time.

The central bank also injected an unexpected 130bn yuan (£13.55bn; $19.94bn) into the market to keep borrowing costs down - in a move to reassure retail investors.

The measures, however, did little to prevent Chinese shares from falling in afternoon trade.

More volatility ahead?

Analysts said investors were waiting to see if Beijing could stem the latest selling in Chinese stocks and whether more measures would be introduced.

But Bernard Aw, market strategist at trading firm IG, said Beijing was arguably more concerned about economic growth than the stock market.

"Furthermore, it could look really bad if they have to throw in more measures when they are in the process of withdrawing the [last] rescue measures," he said in a note.

The new "circuit breaker" rule that suspended trading nationwide for the first time on Monday was created after sharp falls last summer and was meant to curb market volatility in China.

Monday's 7% fall in China spooked global markets. 

Overnight, US benchmark indexes lost up to 2% as concerns grew that the dive in the Chinese stocks was the start of another volatile period after last summer's dramatic market rout.

Oil continues to weigh

Escalating tensions in the Middle East, which affected oil prices, also dented investors' confidence.

Oil prices were flat after rising as much as 4% on Monday following the dispute between Saudi Arabia and Iran. 

Japan's Nikkei 225 index ended 0.4% lower at 18,374.00, while Australia's S&P/ASX 200 closed down 1.6% at 5,184.43.

Only South Korean shares bucked the downward trend after a senior finance ministry official said the government would take action to stabilise the market if needed, following Monday's steep plunge.

The Kospi finished up 0.6% at 1,930.53.

Worst start ever

Shanghai Stock Exchange started the new trading year with worst performance in its history. For the first few hours after its opening, the main stock index CSI 300 plunged by 7.02%.

The worst-ever start to a year for Chinese shares triggered a trading halt in more than $7 trillion of equities, futures and options, putting the nation’s new market circuit breakers to the test on their first day.

Trading was halted at about 1:34 p.m. localtime on Monday after the CSI 300 Index dropped 7 percent. An earlier 15-minutesuspension at the 5 percent level failed to stop the retreat, with sharesextending losses as soon as the market re-opened. Traders said the halts tookeffect as anticipated without any major technical problems.

The world’s second-largest stock market began the year on a down note after data showed manufacturing contracted for a fifth straight month and investors speculated that the end of a ban on share sales by major stakeholders may come as soon as this week. Chinese policy makers, who went to unprecedented lengths to prop up stock prices during a summer rout, are trying to prevent financial-market volatility from weighing on economy set to grow at its weakest annual pace since 1990.

"This is a pretty dramatic start of trading for the year,” said Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management, which manages about $45 billion. “Some investors may have been unwinding their positions when trading volumes were light. That could have exaggerated the moves. The market has been very difficult to predict.”

Monday’s selloff rippled through regional equity markets, with Asian shares and U.S. equity-index futures extending losses. Chinese stocks’ influence on global markets has increased after the nation’s $5 trillion equity market rout, when the Shanghai gauge tumbled more than 40 percent from mid-June through its August low, rattled investor confidence in the world’s second-largest economy.

Brokerages were prepared for the circuit breakers after conducting tests on the new mechanism last month, according to William Wong, the head of sales trading at Shenwan Hongyuan Group Co. in Hong Kong. About 595 billion yuan ($89.9 billion) of shares changed hands on mainland exchanges before the suspension, versus a full-day average of about 1 trillion yuan over the past year, according to data compiled by Bloomberg.

Under the circuit breaker rules finalized last month, a move of 5 percent in the CSI 300 triggers a 15-minute halt for stocks, options and index futures, while a move of 7 percent closes the market for the rest of the day. The CSI 300, comprised of large-capitalization companies listed in Shanghai and Shenzhen, fell as much as 7.02 percent before trading was suspended. The Shanghai Composite Index lost 6.9 percent.

Individual investors in China, who drive morethan 80 percent of trading, may have rushed to sell after the first circuitbreaker took effect to avoid getting stuck in positions by the 7 percentsuspension, according to Andrew Sullivan, managing director for sales tradingat Haitong International Securities Group in Hong Kong. It took just sevenminutes for the second halt to come into effect as shares tumbled after thefirst suspension ended, according to data compiled by Bloomberg.

Christine Lagarde: In 2016 the global economic growth will be disappointing

The global economic growth will be disappointing next year. This was stated by the head of the International Monetary Fund (IMF) Christine Lagarde in a guest article for German newspaper Handelsblatt.

IMF Managing Director Christine Lagarde said the prospect of rising interest rates in the United States and an economic slowdown in China were contributing to uncertainty and a higher risk of economic vulnerability worldwide.

Added to that, growth in global trade has slowed considerably and a decline in raw material prices is posing problems for economies based on these, while the financial sector in many countries still has weaknesses and financial risks are rising in emerging markets, she said.

"All of that means global growth will be disappointing and uneven in 2016," Lagarde said, noting that mid-term prospects had also weakened as low productivity, ageing populations and the effects of the global financial crisis dampened growth.

In October the IMF forecast that the world economy would grow by 3.6 percent in 2016.

Lagarde said the start of a normalisation of U.S. monetary policy and China's shift towards consumption-led growth were "necessary and healthy" changes but needed to be carried out as efficiently and smoothly as possible.

The U.S. Federal Reserve hiked interest rates for the first time in nearly a decade this month and made clear that was a tentative beginning to a "gradual" tightening cycle.

There are "potential spillover effects", with the prospect of increasing interest rates there already having contributed to higher financing costs for some borrowers, including in emerging and developing markets, Lagarde said.

While countries other than highly developed economies were generally better prepared for higher interest rates than previously, she was concerned about their ability to absorb shocks, she said.

Emerging market companies with debt in dollars and revenue in sinking local currencies could struggle as the Fed begins what is expected to be a series of interest rate increases.

Lagarde warned that rising U.S. interest rates and a stronger dollar could lead to companies defaulting on their payments and that this could "infect" banks and states.

But she said the risks associated with these changes could be overcome by supporting demand, maintaining financial stability and reforming structures.

"Most highly developed economies except the USA and possibly Britain will continue to need loose monetary policy but all countries in this category should comprehensively factor spillover effects into their decision-making," Lagarde said.

She said emerging markets needed to improve monitoring of the foreign exchange risks their big companies face.

Lagardealso said countries which export raw materials and had scope for fiscal policymeasures should use that so they can adjust more smoothly to lower prices.Others should focus on restructuring their budgets in a growth-friendly waysuch as through tax and energy price reforms and changing their spending priorities,she said.

2015 - The biggest year ever for Hollywood

It was officially confirmed that 2015 was the biggest year ever for Hollywood.

North American box-office sales crossed the $11 billion mark, industry researcherRentrak Corp. said Tuesday in a statement. Propelled by the blockbusters“Jurassic World” and “Star Wars: The Force Awakens,” U.S. and Canadian tickets ales surpassed the high of $10.9 billion set in 2013. Revenue is up 7.2percent this year.

Sequels to already popular movies and revivals of older hits, such as “Avengers: Age of Ultron” and “Furious 7,” were largely responsible for the record. Walt Disney Co. and Comcast Corp.’s Universal Pictures were the main beneficiaries, sharing almost half of the year’s spoils. Universal had the biggest share, with sales of $2.55 billion, according to researcher Box Office Mojo. Rentrak expects $11.1 billion in total sales by year-end.

“You are getting great momentum heading into 2016,” Eric Wold, analyst at B. Riley & Co., said in an interview. While the 2015 totals were slightly below his initial predictions, the fourth quarter is expected to exceed his forecasts.

Revenue from “Star Wars” will feed into 2016, delivering a possible 4 percent boost and alleviating concerns about the year’s film slate, Wold said.

A diverse film mix contributed to the industry’s success, Paul Dergarabedian, Rentrak’s senior media analyst, said in the statement.

With U.S.movies so popular internationally, the record North American take also signals a new high mark for the global box office, which has been rising steadily in recent years mainly due to exponential growth in China.