Market Talk- April 10, 2018

Todays comments from China president, Xi Jinping that China was willing to open its markets, soon lent equities a helping hand. From a lower core opening, it was not long before all started to move from strength to strength. Shanghai and the Hang Seng reacted most to the speech and saw returns of around 1.75% on the day. Talk is that Jinping sees himself as the adult in the room and is willing to work towards a more transparent and audible mode of communication. This may coincide with timing but they have been working towards this for a while now. Worth keeping an eye on currencies from here on in but, the relief was certainly seen in both Chinese and US stocks market today. The Nikkei and ASX both moved with the flow, more a weaker Yen and a revival in commodity prices resulted in a +0.5 and +0.8% flurry, but rather more subdued +0.3% for the SENSEX. However, the INR continues to play around the 65 level with the Yen comfortable at 107.

Europe was still abuzz with the talk focusing on Russia and the capital outflow of yesterday. US President Trump is expected to announce escalated measurers over recent events in Syria, whilst Russian president Putin responds with protectionist comments. Over the past 48hours we have seen Russian stocks down around 20%, corporate debt down about 10 points, the Rouble off 6% and Sovereign CDS 40bp wider at 160. European markets totally ignored all of this and focused instead on the apparent trade breakthrough with all core jumping around 1%. Lets hope the Syria conflict doesn’t escalate too much more, but worth keeping a very close eye on the capital flow and especially if currency shows signs of turning.

China’s softening stance had already taken-hold in futures well ahead of the cash opening and so we saw a very strong open. The NASDAQ led much of the way, as tech stocks flood into favour helped by Mark Zuckerburg faced the joint Senate judiciary. NASDAQ gained 2.1% today with the DOW at 1.8% and the S+P closing up 1.7%. Healthy gains across the board despite a mid-session wobble but a strong close. Headlines will be in play again as we await president Trump’s Syria address, but for now even the energy markets were encouraged by a healthy +3.3% bounce.

Japan 0.03%, US 2’s closed 2.30% (+1bp), 10’s 2.80% (+2bp), 30’s 3.02% (+1bp), Bunds 0.51% (+1bp), France 0.75%, Italy 1.79% (+3bp), Greece 4.02% (+7bp), Turkey 12.99% (+21bp), Portugal 1.70% (+4bp), Spain 1.24% (+2bp) and Gilts 1.40% (u/c).