Equity Volatility Continues, Albeit Around A Weaker Trend, But Limited Spillover

Weakness/volatility in China equities remains the main focus point from a macro standpoint, although there isn't much in the way of spill over to other asset classes at this stage.

• Today's moves follows sharp volatility from Friday's session. The weekend also saw regulators vowing to stabilize sentiment, but it still seems we are searching for a circuit breaker at this stage.
• The CSI 300 was down by around 2% earlier, which put the index very close to intra-day lows from Friday. We have since rebounded back to around flat. A break sub 3000 would be fresh lows in the index back to 2019.
• Small cap indices were seeing the heaviest losses earlier. The CSI 1000 off over 8%, but we are now back to down around 6.3%.
• In HK, the HSI is only marginally lower at the time of writing, while the HS China Enterprise Index is also back to around flat.
• The spill over to USD/CNH is only very mild, with USD/CNH sitting slightly lower at this stage, last near 7.2130. It also hasn't impacted G10 FX in a major way. Other regional equity markets are mixed.
• Earlier we had the Caixin services PMI for Jan. It printed at 52.7, versus 53.0 forecast and 52.9 prior. The market didn't react though.