Market Talk- April 12, 2018

The SENSEX was the star performer in Asia today against what looked like a sea of red boards. The SENSEX closed up over +0.5% on the day completing its sixth positive close in a row. Optimism buoyed the market ahead of industrial production and inflation data releases. Solid earnings optimism is supporting prices with good returns seen today for the private banks and IT sectors. In Japan the Nikkei lost ground even with the Yen slipping to mid 107’s. Having rejected the recent mid 104 highs, the Yen just needs a little more to break the February lows. The Shanghai and Hang Seng both edged weaker following lacklustre trading and some headlines claiming president Xi Jinping was too quick to assume the ‘adult in the room’ role. US/Syria tensions appeared to be downplayed later in the day and so we are seeing some healthy gains for futures in US trading hours. Worth keeping an eye on the HK peg also, as today we saw it trade at its lowest level in over 30years (it is pegged between 7.75-7.85 to USD).

Europe spent much of its morning in negative territory again waiting for the US markets to make take the lead. Another tweet and tensions are played down, but that has not stopped the move into the US Dollar from gaining momentum. Talk that the UK parliament could block any UK BREXIT divorce deal has helped GBP gain +0.3% today, an impressive performance when the Euro fell -0.3%. The geopolitical tensions were eased after the (UK) lunchtime tweet and a strong US equity rally helped Europe decide on its direction. We saw the highs just at the close with a positive +0.9% for much of Europe whilst FTSE closed almost unchanged. This following disappointing UK data today indicating a sluggish economy and doubts evolving over the speed of future rate increases.

US opened strong and did not look back. The DOW, S+P and NASDAQ all may headway following yesterdays retreat and all closed around +1% higher on the day. Obviously, the headline was the US/Syria de-escalation and all corners welcomed that. Towards the close all core indices moved off of their highs but was still a strong positive day all around. Industrials, banks and tech are all leading the rally, but we are on the cusp of earnings so it really would be nice to trade on solid headlines rather than just rhetoric.

Japan 0.03%, US 2’s closed 2.34% (+4bp), 10’s at 2.83% (+5bp), 30’s 3.04% (+4bp), Bunds 0.52% (+3bp), France 0.75% (+2bp), Italy 1.80% (u/c), Greece 3.97% (-8bp), Turkey 12.61% (-24bp), Portugal 1.67% (-1bp), Spain 1.24% (-1bp), and Gilts 1.45% (+6bp).