Asian equities sell-off amid Chinese lending curbs

Monday, February 24, 2014

Asian equity indices got off to a shaky start to the week as mounting concerns regarding a slowdown in Chinese bank lending which would impact growth momentum prompted a sell-off. Both the CSI 300 and Shanghai Composite ended the session sharply lower, losing 2.2% and 1.75% respectively with property developers under particular pressure after NBS data indicated that y/y gains in house prices slowed for the first time in 12 months in January. Market participants have grown weary of the recent cooling property sector which also saw the Hang Seng close 1.03% lower as mainland Chinese companies led the decline. Japanese equity indices traded within a wide range overnight with the TOPIX posting an outside day as investors struggled with indecision, closing 0.27% lower. The Nikkei spent the entire session under pressure before recovering some ground towards the close, losing 0.19%.

Gold prices gained some support on haven demand early this morning, opening just below $1,325 and rallying towards previous resistance around $1,333. Prices rallied higher for the third consecutive week as the yellow metal has added 7.1% since the start of the month. Investors will be paying close attention to US manufacturing activity data expected later today for further signs of prolonged weakness.

Three month LME copper prices pulled back further, paving the way for a fourth straight session of declines in direct response to lending curtailments by Chinese banks. Prices ended the previous week 0.42% lower after two consecutive weeks of gains and have since trailed 0.9% lower this morning, testing support levels towards $7,050.

Three month copper prices struggle to hold ground on Chinese lending curbs

LMCADS03 Comdty LME COPPER 3 2014 02 24 08 02 16

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Topics: Copper, Equities, Gold, LME
More from: Kash Kamal