The start of a new month and a solid session across the globe. the Nikkei failed to join the party with a 1% decline today, but then the Yen has bounced a touch (0.3%) to balance some of that move. Interesting this is they claim tech took the markets lower in Japan whilst in the Hang Seng (+1.75%) tech was rewarded for leading the market higher, along with encouraging economic data! The core Shanghai was trading around 1% higher for much of the day, but dipped only in the final hour to close only marginally higher at +0.13%. Late news from the US that trade talks are still a power game of verbal mind games, are making strategic plans ever difficult to set. The Yuan did correct “officially” a little today but for many its the uncertainty that hinders progress. The SENSEX eventually closed almost unchanged but we did moves either side of unchanged for most of the day. The friction between the government and the Central Bank
bank continues to weigh on sentiment but did adopt a more upbeat tone today. This helped core banks – YES Bank and Axis Bank rally 8.35% and 3.51% respectively.
The main talking event in European markets today were not equity indices but more the currency markets. GBP made an impressive push higher against the US Dollar, after the news late Wednesday that a BREXIT deal is around 98% complete. This news with the added bonus of Mr Carney confirming a ‘smooth’ BREXIT could speed a rate hiking cycle helped Sterling trade almost 2% firmer to the Greenback; although keep in mind it is still down 4% for the year. That said all members of the voting committee of the BOE, all voted in favour of an unchanged stance at 0.75%. Most core closed almost unchanged with many still waiting for direction following US/China talks. The bond markets could not help either, all closing within a basis point of previous close. Turkey 10yr did trade above 18% but managed to creep back below into the close. Rising rates are still being blamed, by many, for the stock correction seen in October and are now looking for the next excuse. Worth keeping an eye on oil prices as they retreat once again. Todays 2% decline adds to last months 14% decline. Market talk is that we are expecting the results of the Italian bank stress tests tomorrow which may influence sentiment. Really depends the extent of the Loan book, the derivatives exposure calculation and their capital levels especially given the tightening domestic margins. Probably worth keeping an eye out for the Deutsche Bank result also!
Its was the Russell 2k that led sentiment and markets today with a stellar 2.2% opening November 1st. The NASDAQ was not far behind at 1.65% which just leaves the DOW and S+P returning a little over 1% too. Not a bad opener but obviously we have non-farms tomorrow being the first Friday in the month. Following President Trump’s Tweet stocks have consolidated around their highs, but really could benefit from some solid fundamental data support. Impressive that the range has been relatively tight today as the markets appear to have adopted a sense of calm for today. Apple results after the close will dictate the next market trend given such uncertainty.
Japan 0.12%, US 2’s closed 2.85% (-2bp), US 10’s 3.14% (-1bp), US 30’s 3.38% (-1bp), Bunds 0.40% (+2bp), France 0.75% (u/c), Italy 3.37% (-5bp), Greece 4.18% (-1bp), Turkey 17.70% (-3bp), Portugal 1.87% (+1bp), Spain 1.56% (+2bp) and Gilts 1.45% (+2bp).