Market Talk- November 27th

It was the strength of the Yen that took top discussion point today in Asia, or alternatively, the US Dollars weakness. Having shown early gains, the Nikkei tended to drift and was probably influenced by a much weaker China market. The Shanghai index finished near 1% lower as concerns start to grow following the sell-off that is continuing within the domestic bond market. Since the central bank targeted the reserve requirement we have seen additional bond issuance, but also has nudged banks to increase credit allocation of capital to aid support. The Hang Seng held a little better closing down just -0.6% which actually look s quite impressive when compared to the Shanghai or KOPSI indices (tech names heavy).

Europe followed Asia lower with losses coming fro energy, financials and tech stocks as extremes are starting to way on prices. The Euro broadly benefited against the USD which certainly took its toll on equity markets and watched peripheral spreads. The core (DAX, CAC and FTSE) lost around -0.4% with political events in Germany probably adding to the uncertainty. This is a turn of events from the morning session when all core were trading higher on the day, but even with a stronger US performance Europe trades heavy. The Italian FTSE MIB lost over 1% on the day with financials reversing Fridays gains. WTI closed down nearly 1.5% on talk that there is unease within the OPEC members. A quick word on MiFiD II and it appears most are wanting a delay as the confusion amongst professionals appears to stretch from traders to settlements to compliance. Sounds like much is still open to interpretation.

It was a dull afternoon after having seen the morning highs rejected. Talk that the sales numbers from the weekend had been impressive was not enough to support the stock market at record highs. By late trading the mood from global markets were starting to take their toll and eventually affected the US core. Lot of talk that the Senate vote on tax reform could launch another leg higher seemed to weigh rather than support current levels. With the uncertainty we watched gold move firmer but with only a $9 price improvement, it probably wouldn’t make many headlines. Bitcoin however, will be grabbing headlines having traded close to the psychologically important $10k mark.

2’s closed 1.75% (+1bp), 10’s 2.33% (u/c), 30’s 2.77% (+2bp), Bunds 0.34% (-2bp), France 0.67% (-2bp), Italy 1.77% (-4bp), Greece 5.23% (+2bp), Turkey 12.09% (-31bp), Portugal 1.89% (-3bp), Spain 1,46% (-2bp) and Gilts 1.25% (u/c).


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