The Nikkei gapped lower and despite several failed attempts to rally finally closed down 0.7%. The JPY after hitting the 103.50 level has traded stronger throughout the European and US trading hours gaining over 100 pips and was last seen around the 102.40 level. The Nikkei futures has had the opposite reaction and has slide 0.75% as investors search for Asian safety zones. More rumours of further BOJ easing continue to unnerve markets. Shanghai managed to close above the psychological 3k level when it closed 0.65% lower but is now closed for a three day national holidays. The Hang Seng traded in a narrow range closing small down (0.12%) having lost all of the earlier 0.6% opening gains.
Europe was very uncertain in which way to play today as oil, again, dampened sentiment and central bank policies remain questionable. CAC and IBEX were both down around 0.3% whilst the FTSE and DAX closed almost unchanged. UK employment data had a mild impact early session especially it being post-BREXIT but uncertainty surrounding many areas of vision from central banks to fundamental complacency keeps position takers in check. Luxury goods stocks took a hit across the board with Richemont, Hermes and Coach all lower on the day as all abandoned projected sales targets. Many numbers tomorrow in both Europe and the US so much to play for with the BOE tomorrow and ahead the FED next week.
US markets were holding well for most of the day but in the final hour of trading sellers returned with DOW and the S+P indices closing negative while the NASDAQ saw a firmer end to the session. Not usually an asset class itself but the VIX (ETN) traded more volume than the largest stock and closed around 17.9 today. Lots of US data tomorrow where dealers will be looking for comfort or excuses.
Given the uncertainty around stocks the flight again headed towards the bond markets. US Treasuries saw a parallel 4bp shift across the curve with 2’s closing 0.76% and 10’s 1.70% (-4bp). Meanwhile in Europe the German Bund saw heavy buying interest with 10’s closing 5bp lower closing at 0.02% (-5bp) almost back in negative territory. Italy 10’s closed 1.29% (-3bp), Greece 8.32% (+7bp), Portugal 3.24% (-3bp) and Gilt 10yr at 0.87% (-4bp).
