Market Talk- March 28, 2018

The last couple of hours in US markets heavily influenced Asia’s opening despite signs of DOW futures stability. Technology was hit hardest and continues to lead much of the move around the globe. Shanghai was off around 1% at the open but then attempted a positive print. However, that was eventually rejected and closed down 1.4%. Hang Seng did not have the luxury of a bounce and just trended lower all day. Eventually closing down 2.5% is was financials, technology and real estate that led declines. The Nikkei had a similar price action but managed to recover over half of its intraday losses. It closed down 1.3% but had seen levels in-excess of -2% a couple of times throughout the day. We have seen the USD continue to make ground against the Yen throughout the day, was last seen trading high 106’s (-1.45%). SENSEX drifted with others but, probably due to lack of volume, it held in reasonably well (-0.6%) managing a close with the 33k handle. We continue to highlight that the INR remains bearish but, even todays weakness failed to support stocks. A$ continues to trade weaker playing within the bear trend, all rallies remain a sell.

Early talk that Kim Jong Un has agreed to denuclearize the Korean Peninsula lifted European markets off of their days lows. Lows were hit shortly after the opening and have rallied back to positive towards the end of the day. The early weakness lifted fixed-income with 10yr Bunds dipping below the 0.5% level again. The UK’s FTSE was the first of the core to make it into positive territory as the CAC and DAX lagged behind. Currency is just about keeping its head above water after the recovery rally yesterday. This will probably be a key sector to watch going into month end Thursday. Many markets are closed for the long holidays this weekend so quarter end will be interesting. US data did not really surprise markets although the positive revision to Q4 GDP numbers are still a revision to last year. Eyes will be eager to see Q1 release more so. It did have a small positive impact on the USD at the time, but nothing substantial just yet. Then the afternoon wore-on and the USD finally shows the capital flow is alive and well as currency starts to make its move. European bourses closed mixed after the morning flurry was rejected.

US was again driven by the NASDAQ and continued concerns surrounding conflicts between social media and media regulation debates. Amazon and Apple tended to dominate headlines with stocks down around 7%. Q4 GDP came-in above expectations with Wholesale Inventories also revised from +0.5% to 1.1%. Q1 GDP however will reset the agenda upon release. Treasuries saw 10’s rally (price) back to sub 2.75% with more flattening seen from demand.

Japan 0.035%, US 2’s closed 2.28% (+1bp), 10’s 2.77% (u/c), 30’s 3% (-2bp), Bunds 0.51% (+1bp), France 0.73% (u/c), Italy 1.83% (-3bp), Greece 4.31% (-2bp), Turkey 12.42% (+6bp), Portugal 1.62% (-1bp), Spain 1.19% (-3bp), Gilts 1.36% (-6bp).