6.15% fall in Shanghai Composite contained

Chinese stocks sank the most in three weeks today but it hasn't sparked a broader run on risk assets or commodities.

A few reasons were cited for the sharp decline:

  • Chinese property price data showed average new home prices rose 0.3% m/m in the third consecutive rise. That was seen to diminish the chance of an RRR cut.
  • On Friday, the China Securities Finance Corp said it will reduce buying as volatility falls
  • The PBOC injected its largest 7-day reverse repo since Jan 2014 in another sign China will use alternatives to an RRR cut.

The Australian dollar is under some modest pressure today, down 40 pips but part of that was from some jawboning in the RBA minutes.

S&P 500 futures point to a 3 point decline after an 11 point jump on Monday.