Market Talk- March 9, 2018

A strong opening for all core Asian markets, but not all could maintain the opening strength. The Nikkei had a great morning session up over 1.3% then was hit after lunch but still managed a +0.5% gain for the day and a +1.4% on the week. Nerves ahead of the US non-farms tended to restrict the rally but having seen the US numbers, futures have bounced all the way back. The US numbers lifted the USD which has pushed the Yen weaker towards a 107 handle. Shanghai was not that sure initially, even drifting into the red, but afternoon and weekend confidence returned and we closed at the days highs (+0.6%). The Hang Seng closed pretty much where it opened with real estate, financials and technology all helping produce a +1.1% return. SENSEX closed lower on the day (-0.15%) and -2% for the week as President Trumps trade talks continue to worry the markets.

Europe really looks like it is searching for direction and even today US numbers could not help them! The DAX spent much of the morning in and out of the red, then rallied upon the US numbers. However, this was only to be temporary as not even a 1%+ rally in core US indices could help the lagging European markets. Having watched the NASDAQ and other core US markets continue with their strong returns, it will be interesting to see next weeks performance. US jobs report as we all know now was a wonderful 313k headline print, with a turn in the participation and wages rising less than the 2.6% expected. Looks like growth is with us for a while with expectations of three or even four rate hikes now being priced for this and possibly next year. UK’s FTSE and CAC both up +0.3%, with a small negative for the German DAX.

Obviously, a great day for all US core indices on the back of the NFP as we watch the NASDAQ hit record highs, whilst BITCOIN losses 25% on a week. Large cap technology companies, financials and energy all helped core rally +1.75% and the VIX drop 11%. News that North Korea is keen to talk and that President Trump has accepted the invitation is also aiding market sentiment. The capital flow into the US is heading towards the private sector with many looking to avoid fixed. Could be interesting next week when the Treasury issue all that duration.

Japan 0.05%, US 2’s closed 2.27% (+2bp), 10’s 2.90% (+4bp), 30’s 3.16% (+3bp), Bunds 0.65% (+1bp), France 0.89% (+2bp), Italy 2% (+3bp), Greece 4.14% (+4bp), Turkey 12.02% (+7bp), Portugal 1.84% (+5bp), Spain 1.42% (+3bp), and Gilts 1.50% (+3bp).

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