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Market Talk – December 22, 2015

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Asia returned a quiet lacklustre day’s trading on Tuesday with Toshiba alone being the reason the whole market had edged lower. The stock sank an additional 12.3%, extending Monday’s 9.8% decline having stated it is expected to post a 550B loss in yen ($4.54Bln) for the fiscal year. In Shanghai and Hong Kong, we saw marginal gains of around 0.25% each.

Europe ended a quiet day mixed (DAX -0.1%; CAC +0.05% and FTSE +0.8%) as oil continues to drift lower. The lower/slower market momentum was blamed yet again on the decline in Brent and the much-discussed glut in storage. Interestingly, the spread between WTI and Brent has tightened, yet again, as delivery costs retreat into insignificance when absolute prices are so low.

As the U.S. markets opened the drift of money continues to flow towards the USD resulting in a strong performance across all U.S. Indices. The Dow closed up +165 points (+0.96%), the S&P up 18 points (+0.88%), and finally the NASDAQ closed +32 points (+0.65%). The USD saw a strong performance against GBP today gaining around (0.5%) to push Sterling below 1.4800 at one stage in the day.

We have finally seen the last big data point for the year (US GDP) earlier today and despite a 2% print (against a forecast of 1.9%) this failed to alter any markets course and so we finally wind down for Christmas.

Gold has drifted a little in late trading (currently down $8) at $1072 and the U.S. Treasury market has drifted also. Last I saw US 10s trading at 2.23% (+4BP) whilst 10yr Germany was last seen at 0.60% which closes the spread this evening at +163BP.

Into year-end, it is worth watching the spread between US/Germany in the bond market, keep an eye on the WTI/Brent spread also and finally the U.S. dollar itself. The DXY closed this evening marginally lower at 98.20 (-0.15%).