Market Talk- April 18, 2018

Wall Streets euphoria spilled-over into Asia with many markets making gains. The one outsider today was the SENSEX which closed marginally lower -0.2%, breaking its recent winning streak. We continue to see the INR trade weaker against the dollar and now is heading for levels not seen since late September 2017. The majority of the day traded in positive territory and was the last hour that saw some profit taking into the close. However, away from India we saw healthy gains for Japan, China, Australia and the KOPSI after news of constructive North/South talks. The Nikkei gained +1.4% following a weaker Yen helping exporters, but to be fair did see a broad based rally. A healthy +0.75% days return for both Shanghai and the Hang Seng following yesterdays RRR rate reduction but also aided by positive sentiment coming from a strong US session.

Europe was a mixed bag today with the DAX barely managing to break into positive ground, whilst the CAC and FTSE increased +0.5% and +1.25% respectively. Economic data helped some whilst hindering others. The Auto sector was a real drag for Germany (lowest in 5yrs), but commodity rallies helped the FTSE. GBP had a poor day after inflation numbers dropped from the 2.7% down to 2.5% and Sterling broke below the 1.42 level resulting in a near 1% fall from yesterdays highs. European numbers actually beat forecasts, but failed to break the previous release. Energy prices were a huge boost today especially when we saw gains in-excess of 3%.

Although futures indications were positive ahead of the opening bell, values took a while to actually see the DOW make ground. The NASDAQ and S+P both were prepared to run but the large industrials were not convinced. Earnings have been releasing better than expected, but the currency increasing is having a marginal tug on equity gains. Confidence is improving as noted by the FED’s Beige book even after the IMF’s warning of global growth announced yesterday. The DXY is holding recent gains which is supporting the talk of capital flowing into the US.

Japan 0.03%, US 2’s closed 2.43% (+4bp), 10’s 2.87 (+4bp), 30’s 3.06% (+4bp), Bunds 0.53% (+3bp), France 0.74% (+1bp), Italy 1.71% (-4bp), Greece 3.95% (-2bp), Turkey 12.32% (-35bp), Portugal 1.59% (-1bp), Spain 1.20% (-1bp) and Gilts 1.41% (-2bp).