Asian Markets Tank Across the Board on Weak Manufacturing Data Coming out of India And China

Asian shares plunged by close to 2 percent across the board during Monday’s trade on the back of the sell-off seen in the Chinese markets which plunged by close to 7 percent before being halted for trade during the trading session. Most emerging market currencies were lower during the trading session indicative of the fact that investors are moving away from risky emerging market assets towards safe haven currencies like the dollar.

It was reported today that the Chinese manufacturing contracted for the 10th straight month in December as demand remained weak and factories trimmed staff and output. According to a report released by market research firm Markit, it was stated that its purchasing managers’ index fell to 48.2 in December as compared to a reading of 48.6 in the previous month. It is important to state that a reading below 50 is indicative of contraction in the sector. The Chinese markets had to be halted for trading as the index plunged by close to 7 percent on heavy volumes and hit circuit filters and is being seen as a huge negative by traders and investors on the street.

Crude prices were higher during the Asian trade on the back of reports that Saudi Arabia had cut all diplomatic relationships with Iran on the back of the attack on the Saudi embassy in Iran. The decision is being seen as a huge negative and has made many traders believe that it could lead to increased tensions in the Middle East which would be seen as a positive for crude prices in the near term. Traders believe that crude prices could head to levels of $38.45 in the near term. Many traders are of the view that the surge in the dollar could keep the upside of crude prices in check in the near term.