Market Talk- January 9, 2019

More positivity in Asia today as hopes build following US/China trade talks entre their third day. Today, it was the turn of the Hang Seng to lead the pack with a impressive +2.27%, while Shanghai returned +0.7%. Tech shares helped the HSI rally today, but also talk of policy support pushed sentiment. We did see late movement in the CNY as speculation of a helping hand pushed it +0.6% against the USD. Impressive following Car Sales release was first fall in 20yrs! The Nikkei rallied another 1% today in Tokyo, taking advances to three straight days. The Yen did trade with a 109 handle in early trade, but did bounce the hardest when USD were hit in the US. Only speculation, but there was rumours that the US could suffer a ratings blow if the shutdown continues! An hour before the close of the SENSEX prices were lower on the day. However, in the final minutes, prices recovered to a +0.64% close whilst the INR trades down -0.6%. The oil price does have a significant impact on India’s markets and the recent 16% bounce is taking its toll.

The BREXIT timetable is now in shock mode after Theresa May realises the government has just three days to return with an alternative plan if she loses the January 15th vote! Until this morning, it was anticipated it had 21 days following the likely defeat, but a massive ruling by the Speaker reset the recourse timetable down to just three days. This news came to late in the day to affect FTSE (+0.66%), but it did manage to return GBP from a 1.28 handle back to the mid 1.27’s. Most core indices (CAC, DAX) drifted lower into close but still managed a +0.85% return. It was mainly awarded to export capacity stocks benefiting from the hopeful China/US trade talks that helped values today. However, there remain much criticism on the side-lines, notably Poland’s PM, who highlighted the disparity and the apparent “discrimination” displayed between some EU members (He highlighted France and Italy in his address).

After a mildly shaky start US indices eventually settled in for a positive day. The move was always going to be dependant upon the FED minutes, but having heard from FED officials earlier there was not really that much to puzzle the markets upon release. The topic of discussion for many today has been the -0.6% decline in the Dollar Index. Most key emerging market currencies have taken the opportunity to run resulting in most Eastern European pairs gain +0.8%, whilst core Euro, Yen and GBP recovered +0.7% on average. Stocks liked the idea of FED easing its stance, but then the forwards have already priced zero move for 2019. This maybe pricing a little too simplistic approach, but considering the improved demand for US 10yr auction today, that does appear to be consensus. In late trading the market saw the recovery continue for WTI, taking the rally from the December lows to over 20%. NASDAQ led again at +0.87% with DOW and S+P +0.4%.

Japan 0.02%, US 2’s closed 2.57% (-2bp), US 10’s closed 2.73% (u/c), US 30’s 3.03% (+2bp), Bunds 0.22% (u/c), France 0.71% (-2bp), Italy 2.87% (-8bp), Turkey 16.35% (+17bp), Greece 4.27% (-4bp), Portugal 1.77% (-4bp), Spain 1.49% (-2bp) and Gilts 1.26% (-1bp).

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