Shanghai Composite Index once again closes in the red

As news dispersed throughout the markets about China revising its 2014 GDP growth rate from 7.4% to 7.3%, the Shanghai Composite Index was exposed to further losses and ended up closing -2.52% lower. Most other Asian equities followed this pattern, but the Nikkei255 showed resilience and closed positively gaining +0.38%. Despite further weakness being seen in the China markets, European equities are currently enjoying a positive start to the week with these markets currently making gains after the G20 summit on Sunday played down concerns that the weakness currently seen in China will threaten the global economy. Some bullish sentiment has been reimbursed and this can be seen with the FTSE currently up around 0.50%, while the German DAX has risen by around 0.60% at the time of writing. WTI has experienced a slowdown since unexpectedly climbing to the $49 region during the final days of August, and is currently at threat to dipping below $45 after hitting a low at $45.15 earlier in trading. Prices are remaining under pressure with the firmer USD and constant oversupply in the markets continuing to limit gains to the upside. A technical breakdown below the $44.0 on WTI may expose this commodity to further losses. In regards to the Euro, the effects of the dovish tone from Draghi in last week’s ECB conference still lingers on, with the single currency moving lower against both the USD and GBP. The heavy selloff may suggest a change of sentiment and expose the Euro to further losses. Global events such as the decline in commodity prices have punished the inflation targets for Europe as a whole, and could lead to further QE for Europe. Commodity currencies are continuing remain under pressure, with both the AUD and NZD looking vulnerable to further losses. Both the AUDUSD and NZDUSD ended last week bearishly and may be exposed to more losses this week as market participants focus on the developments in China. Emerging markets are looking vulnerable to further punishment from the falling commodity prices. The punishment of the Brazilian Real is showing no signs of coming to an end, with sentiment weakening further following the news of Brazil entering a recession and the decline in currency value enticing inflation pressures. Although the USDBRL is already trading at levels not seen since 2002, the currency remains bearish and can weaken further. The New York session has yet to open, but with the Shanghai Composite Index closing at -2.52%, this may ripple into the American equity arena.

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