Market Talk- June 22, 2018

It was time for the Nikkei to play catch-up having outperformed many of its neighbours over the past week. The Nikkei lost around -0.75% for the day, whilst the badly beaten China core finally saw a bounce. Accompanying this Nikkei decline was a flight into the Yen currency with the result being a print with a 109 handle. Exporters were much of the decline with telecoms and energy following closely. It was encouraging to see a Friday bounce for the Chinese indices with core Shanghai and Hang Seng rallying +0.45% and +0.2% respectively. We have a lot to play for next week when we see month, quarter and half year end so will be interesting to watch how numbers close. The SENSEX has not had a great week or indeed month, so a rally today could set the trend for next week.

Europe has opened better following a pretty mixed Asian session. However, yesterday we saw the US futures rally rejected once the cash market opened. The core is battling with OPEC, BREXIT and Trade Talks all setting an uncertain outlook. there is more uncertainty today after the Dutch Finance Minister rejected the Franco-German idea of joint Eurozone debt. This comes as Greece is finally free from eight years of managed debt discussions. The mid-morning positive move in oil helped the CAC to a +0.85% gain just ahead of the US market open. DAX was underperforming at just +0.4% and even that was rejected after President Trump talked of a potential 20% tariff on German cars. This took the DAX negative only to bounce again at the close up +0.5%. Both the CAC and FTSE did well in the afternoon closing +1.5% on the day.

US markets performed well for most of the day, but for the NASDAQ. Talk that technology companies may face greater regulation following court ruling over warrant requirements has heightened fears covering the Fourth Amendment. Thirty-five US banks passed the US Stress Test (buy-backs possibly approved next week) which is a contrast to European results. BITCOIN closed down -8.5% after Japan announced that exchanges should ensure greater supervision against money laundering.

Japan 0.03%, US 2’s closed 2.54% (u/c), 10’s closed 2.89% (u/c), 30’s 3.04% (u/c), Bunds 0.33% (u/c), France (0.7% (u/c), Italy 2.68% (-4bp), Greece 4.08% (-16bp), Portugal 1.80% (-2bp), Spain 1.34% (+1bp), Turkey 15.68% (-44bp) and Gilts 1.32% (+4bp).