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Market Talk- November 27, 2018

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Even though the US market lost a little of Mondays gains into the close, the mood in Asia still appeared reasonably constructive ahead of any trade talks. The Hang Seng was a little more confident as it responded well to rebounding tech values, but even then only managed a near unchanged close. Shanghai opened well and spent much of the day in positive territory only to close a touch lower. The lack of fresh news really is starting to weigh on confidence. Worth remembering that the Shanghai index is still down over 22% YTD. The Nikkei played between leading economic data and a weaker currency. The Yen is now closing ground on the 114 handle and a close above the 114.75 level is the target many are talking. Both the ASX and the SENSEX had similar trading patterns today, as each rallied in the final two hours of trading. Gains are helping momentum for both but at the expense of their currencies.

All core European indices had their moments in positive territory today, but sadly could not hold their gains. All closing off between -0.25% and -0.5% has capital flowing towards the States again. Resources, Auto’s and Financials led much of the declines with many liquidating positions ahead of year end. Talk is that the BREXIT negotiations are to deteriorate has seen Sterling under pressure for much of the day. In late trading GBP is at the days lows and off almost 1% today. There are also rumours that Italy will not reconsider its budget proposal and is reluctant to present a fresh appraisal. 10yr BTP’s did widen 2bp but is only reversing a fraction of the gains made over the past couple of days.

News that President Trump appears anxious to apply fresh tariffs to pressure China had a negative impact on early stock prices. We did see some tech stocks falter at the start of trading but were rejected by the close of business. Rumours of some possible large tech breakup’s were ignored as has been debated and priced in previous sessions. Gold is on the back foot again as is oil again, but nothing really when compared to the crypto declines seen recently. Do not forget we have FED Chairman Powell speaking
tomorrow evening at the dinner event, which could catch a little market gossip when he may share his personal view of the current situation. Worth keeping an eye on the demand for US Dollars over year end. Talk is the bid is creeping close to 20% for your year end Dollars. All core indices are rallying into the close so could very well be positive news on the horizon as far as US/China talks are concerned.

Japan 0.08%, US 2’s closed 2.83% (u/c), US 10’s closed 3.06% (-1bp), US 30’s 3.32% (u/c), Bunds 0.35% (-1bp), France 0.73% (-1bp), Italy 3.28% (+2bp), Turkey 16.08% (+13bp), Greece 4.31% (-4bp), Portugal 1.87% (-1bp), Spain 1.55% (-1bp), and Gilts 1.39% (-2bp).