Market Talk – November 10th, 2017

Asian cash responded to the US news of possible Tax Plan delays and we saw profit-taking and nerves for the first time in a while. Interesting that this has occurred on our November temporary pause expected. The Nikkei has returned -0.8% which has added to yesterdays decline but is falling from the 26 year high. Values were lower in morning trading but recovered much in afternoon trade. The Yen, uncharacteristically, has been content to play in a very narrow range which is a good indication that many players sit on the side-lines. Normally, we see the Yen strengthen in a flight to safety, but this sell-off feels to have less people concerned as they wait anxiously for lower prices in order to buy. China’s Shanghai index off-set the Hang Seng close with the two returning very little either way. The talk in China today was the move towards opening its market by increasing the amount of percentage available to foreign companies in JV’s. This is another stage in the creativity opening the Chinese financials markets and a move which many will welcome. Little by little these changes demonstrate their contention as the next global financial centre.

 

On a day when many were happy to sit and wait or at least, not chase offers, markets dropped but still with little volume. BREXIT talks were the hot topic of conversation with the EU telling the UK to move faster. This uncertainty looks to be all part of their strategy of apply pressure in any direction they can to unsettle an already unsettled government. GBP rallied the past couple of days but has turned back towards the end of US trading. FTSE followed the DAX and CAC indices lower closing down around -0.5% on the day. Given the fact that the equity sell-off we have seen this week ‘seems’ to be reasonably well controlled, the demand for gold has subsided and today we saw the $1270 level again under pressure. Gold still trades heavy with lower prices still on the cards.

 

Initially, the US cash indices were encouraged that all recovered quite well on Thursday but, having opened weaker it none could really recover and prices slipped into the weekend. Although, we are seeing buyers backing away there really is very few signs of sellers chasing. Values have drifted in the past few days but having just witnessed a solid earnings season its capital flow that supports sentiment. Consumer Confidence data released were a bit of a shock falling way short of expectation but that seemed to hit the treasury market long end more than stocks. The balance is a strong economy and the FED’s in play (flatter curve as money still US bound) or slower economy the CB not in play and cash looks elsewhere – fun eh! EU and UK are still bickering, which clouds the outlook even as the gold price declines. Bonds are also starting to drift again and yesterdays yield rises were supportive of the rejection of extreme levels.

 

 

2’s closed 1.65% (+2bp), 10’s 2.40% (+8bp), 30’s 2.88% (+8bp), Bunds 0.41% (+4bp), France 0.77% (+2bp), Italy 1.83% (+3bp), Greece 5.06% (+2bp), Turkey 11.90% (+8bp), Portugal 2.03% (+2bp), Spain 1.56% (4bp) and Gilts 1.34% (+8bp).