Market Talk- February 23, 2018


A strong day for Asian equities with good performances from the core and periphery. It was only the Shanghai index that looked unsure early in the day that briefly slipped into negative territory after lunch, but only to finish back at opening days highs. A strong +0.65% return led by financials and industrials to close the holiday shortened week. The Hang Seng again led by energy, real estate and the tech sector with continued flow from mainland markets. Despite the appearance of stability there is still buyers looking at the Yen for safety. Industrials and utilities were drivers here today contributing to a +0.7% gain, but probably not a bad result after the disappointing inflation numbers this week. Closing on their highs of the day does display some confidence for next week. Others markets also closing on the days highs were the ASX and SENSEX. Both gaining just under 1% were amongst Asia’s top performers just behind the KOPSI.
Europe proved less than convinced by the rally seen in Asia and the US indices. Core DAX and CAC held their ground but saw a poor response from the FTSE and IBEX. Even by the close of trading the trend was less than convincing despite a recovery in most markets. Most did finish at or close to their days highs, but with volumes so thin and month end next week we will all be watching to see how US stocks close the week. Corporate results had more of an individualistic approach than anything failing to provide any insight. RBS results came the closest to influencing trend in the FTSE after lower than forecasted shares fell almost 5% dragging on the FTSE. Next week we hear from the new FED Chairman and also see German inflation report.
US started well and although a wobble mid-session, the last hour took values up to their days highs closing up almost 300 points. Volumes were light but then have been all week. Week on week there has not been too much of a move but was encouraging we closed firmer this Friday. All core closed around +1.25% and so we wait to hear from the new FED Chair Jerome Powell, on Tuesday next week, when he addresses the US House of Representatives Committee. The treasury curve is back in the flattening theme again as the capital flow edges towards US Dollars again.
Japan 0.045%, US 2’s closed 2.24% (-1bp), 10’s 2.87% (-5bp), 30’s 3.16% (-4bp), Bunds 0.65% (-5bp), France 0.93% (-5bp), Italy 2.06% (-1bp), Greece 4.31% (+3bp), Turkey 11.56% (-2bp), Portugal 2.01% (+1bp), Spain 1.58% (+7bp) and Gilts 1.52% (-2bp).