Another weak session for the Nikkei but also the Hang Seng came under pressure given global large cap weakness. The JPY saw another reach as a safe-haven with almost another handle change down to 111. However, despite coming close we have not yet traded there today. Dealer were expressing concerns on the move Presidents Trump’s Administration have made concerning Iran and the on notice statement. Uncertainty is not a commodity market are happy with and that has been reflected all week. Todays data in Asia only just acted as support for the ASX even after a very strong Trade data release (A$3.5 versus estimates of A$2.2) only just managed to hold the index small down. Shanghai exchange reopens tomorrow as we see all Asian futures indices trading better along with Wall Streets bounce.
Europe seems all about the UK governments White Paper (official government report) release and the BOE meeting. The BOE spent much of the time implying they got it wrong but were happy figures had picked-up[ but still remain cautious for growth further out. Mr Carney still highlights that the UK economy will be 1.5% smaller by 2019 than had the UK vote remain. The FTSE did advance 0.6% but equally we saw a 1% decline in the currency. Elsewhere the DAX suffered in comparison to other core European indices with many pointing the finger at Deutsche Bank as the culprit. Deutsche Banks numbers for Q4 were a disappointment with revenues falling to there lowest in five years. Legal and provisions hit numbers whilst trading did increase. Fixed-income trading rose 10% but is only a shadow of its US peers 40%+. The strategy remains shrink cost base and sell assets to avoid a capital increase.
This weeks just appears to show the same pattern day after day, we open small down – hit lows around lunch then close small down! Just feels that now the FED is out of the way tomorrow NFP will set the trend the all of next week. The ADP we saw Wednesday was a strong surprise for the market and i8if we see anything to that projected magnitude that really will be interesting. Today, the initial surge in bonds has faded as we drift further into the session with the Equity and DXY markets look looking to recover some of this weeks losses. Earlier today we heard of the Iran missile test and that spiked nerves. The call between President Trump and Australian PM (Malcolm Turnbull) was rumoured to have not gone to plan and now Mexico issues are raising up. If the market can concentrate of economic data, we may well be in for some positive energy, so lets hope that is exactly what tomorrow NFP will provide.
US 2’s little changed after the FED and ahead of NFP’s at 1.20%. 10’s still around 2.47%. German 10yr Bund 0.42% puts US/Germany spread +205bp. Italy 2.22%, Greece 7.39%, France 1.04%, Turkey 10.65%, Portugal 4.06% and Gilts 1.38%.