Market Talk- April 3rd, 2018

With the exception of the SENSEX, all of core Asia opened in negative territory over concerns surrounding the US/China dispute. Although major US indices had lost over 3% intraday they did show remarkable resilience by the close gaining over 1% in the final 45 minutes of trading. It was this that provided the much needed enthusiasm which helped Asia recoup throughout the day. SENSEX closed with a +0.35% gain with currency showing small gain. Banks were some of the largest benefactors after the RBI extend provision losses for some financial holdings. Outlook remains negative for INR longer term. In China the Hang Seng saw a similar trading pattern to India by recovering to close positive. However, the Shanghai index opened weak and remained under pressure for most of the day. In Japan the Nikkei traded well all day having opened on its lows. Also, adding to those gains in US hours which is having negative influence on the Yen and is seen trading 0.7% weaker on the day at mid 106’s.

The mood remains quite sour in Europe even after a positive US open! Most core indices opened weak and despite many desperate attempts all failed to finish in the plus. The UK’s FTSE had the best option mid-afternoon but, that failed after GBP recovered from early losses. Data releases were also unable to help as the Manufacturing number released below estimates at 56.6. The DAX was the worst performing core European index in Q1 with a negative near 7% return. Unless the Euro is able to lend a helping-hand, it would appear it may remain that way for Q2 also. What will be interesting to watch is how European indices react tomorrow w to the US rally if the Euro recovers ground.

The US late Monday bounce gained further momentum today with an impressive 400 point rally to regain the psychological 24k level again. A key reason behind todays movement was the recovery of the FANG stocks all adding around +1.5% in today’s trading. Still a lot to play for this week but certainly an impressive recovery from yesterdays lows.

Japan 0.015%, US 2’s closed 2.28% (+1bp), 10’s 2.78% (+4bp), 30’s 3.02% (+5bp), Bunds 0.50% (+1bp), France 0.73% (+2bp), Italy 1.79% (+1bp), Greece 4.21% (-5bp), Turkey 12.22% (+3bp), Portugal 1.61% (+3bp), Spain 1.17% (+2bp), Gilts 1.36% (+1bp).