Asian markets focused in Wall Streets rally and especially as trade concerns appeared to have faded for now. We saw another solid day for Shanghai (+0.5%) but sadly the Hang Seng was unable to join the party. It looks as though the tech sector is failing the HSI, but then it has been the star performer for a while now. For much of the day it was Shanghai that looked to be struggling, whilst the HSI traded strong. A reversal in the final hour turned things around as financials, pharmaceuticals and real estate hit the index. In Japan the weaker currency helped exporters and energy stocks which pushed the Nikkei to add another +0.7% to Mondays gains. The talk in India is more focused on the currency than the SENSEX. There were rumours that the sharp appreciation late yesterday was due to a helping hand, but others thought it more option related. Either way, the trend resumed today and we drifted back close to the 68.85 level. This does not look to be turning anytime soon and a fresh break to new lows can not be ruled out just yet.
Europe was not sure initially which way to take the markets. Having been drifting for much of the mornings session, it was the strength of the US markets that provided the enthusiasm. Airbus led the CAC but then it was upgraded earlier in the day. This and tech helped it rally to a +0.7% gain. The DAX also closed firmer (+0.5%) but had the financials sector (DB -1%, Commz Bk -1.5%) dragging its heels. BREXIT headlines were surprisingly quiet today as was GBP and FTSE. There are just still so many unanswered questions that all we can do is follow the money and that’s been a one way street for a while now, despite the occasional positive data release. We should have more later in the week, as there are still so much up in the air.
US stocks added to yesterday gains by closing near the days highs, up 150 points on the day. The talk today was that the NASDAQ appears to have topped recently as money looks to be favouring large caps. Industrials and utilities are finding the bid as fresh money looks to be accelerating towards the US. The lack of trade war headlines have encouraged money into the multinationals which is good to see after such a long bout of weakness. NASDAQ only just managed to scrape into positive territory. DOW a stellar 1.3% boost, with the S+P managing just +0.35% today. Earnings season approaching, but with all the negativity and uncertainty around the rest of the world – what market is big enough to take the size. US looks to remain favourite for a while yet.
Japan 0.04%, US 2’s closed 2.57% (+1 bp), 10’s closed 2.87% (+1bp), 30’s 2.97% (+1bp), Bunds 0.32% (+2bp), France 0.65% (+2bp), Italy 2.66% (u/c), Greece 3.79% (-2bp), Turkey 16.90% (+50bp) Confidence seriously starting to leave this country, Portugal 1.74% (-2bp), Spain 1.27% (-2bp) and Gilts 1.30% (+5bp).