Market Talk- September 29th, 2017

The Nikkei lost just a smidgeon today but still holds levels way up on the year. The YTD number is just over 6% because much of the rally was in Q4 2016, so on a 1yr basis is up almost 22%. The Yen continues comfortably mid 112’s but with more weakness expected. Elections will be interesting next month especially with the new party, led by Tokyo governor Yuiko Koike, only just formed last Wednesday. Todays Japanese data saw mixed results with Consumer Prices, Retails Sales and Industrial Production all showing opposite trends. Almost every other Asian exchange closed higher with HSI, Shanghai, and Australian ASX all closing around +0.3% with the KOPSI closing a strong near 1% gain for the day. Financials and exporters have been the leaders in this rally but probably to the detriment of the currencies. National holidays in China next week.

We saw all core European indices finishing positive today with the UK’s FTSE was leading the day with a +0.75% gain. For international holders there was a currency decline of -0.6% to consider however. However, the German DAX closed up just over +0.9% with the CAC up +0.7%. The Spanish IBEX was a touch better but with the weekend in obvious focus – Monday could be volatile. Eurozone inflation was a little under market forecast but individually France was better than expected. In the UK GDP grew 1.5% which was weaker than the anticipated 1.7%. GBP suffered throughout the day as a result and even saw the value accelerate the decline into the European close. Late afternoon rallies helped all core as we witnessed yet more records set for US indices.

Another good day for tech stocks resulting in a great quarter for the NASDAQ. Energy and Materials have not been far behind with Real estate and Consumers almost flat. We saw more fresh highs for the DOW (transports) and the Russell. October could be fun as we still have yet to see a meaningful pullback, especially as the DXY appears to be firming up also! On the data releases the Chicago PMI released above expectation but was marginally off-set by the University of Michigan index slightly below expected forecasts. Into the close what appeared to be fresh buying lifted all indices for yet even more records. The DOW closes with its first 8-quarter winning streak in over 20years, resulting in one of the best years in a very long time.

2’s closed 1.48% (+3bp), 10’s 2.33% (+2bp), 30’s 2.86% (-1bp), Bunds 0.46% (-2bp), France 0.74% (-2bp), Italy 2.10% (-1bp), Greece 5.53% (-8bp), Turkey 10.68% (-1bp), Portugal 2.34% (-3bp), Spain 1.59% (-2bp) and UK Gilts 1.36% (-1bp)