Market News
- USD (USDIndex 93.10) weakened to Wednesday lows (92.94) post BOE, SNB, Norges Bank, CBRT, weak PMI’s & Claims and Evergrande missing interest payment deadline – AND no comments from the company. US Federal budget – stand-off continues.
- Yields stormed higher overnight (10yr closed higher at 1.336%) jumped 10bps to 1.434% in Asian trades (highest since March 2020)
- Equities rallied again over 1%, sentiment rises but Evergrande worries persist (HSBC, UBS & Blackrock – exposed to a total of $875m). Total offshore exposure – $20bln of the $300bln. USA500 +53 (+1.21%) at 4448. USA500.F lower at 4433. Dow +1.48%. NIKE & Costco beat Earnings. Asian mixed – Nikkei +2%, China lower. VIX tumbles again to 20.50
- USOil continues to recover breaches $73.00 – GS talk of $85+ if there is a cold winter.
- Gold dropped to $1737 (31 day low) has recovered to $1755 now.
Overnight – NZD trade balance tanked, JPY CPI & Manu & Services PMI all missed, UK Consumer Confidence halved (-13 vs -7).
European Open – December 10-yr Bund future down -24 ticks, alongside broad losses in US futures. Norway kicked off rate hikes in Europe, BoE is also inching towards reduced stimulus which together with Fed tapering hints this week seems to have triggered a market shift. Stocks weren’t too spooked by the yields rise, but uncertainty over Evergrande’s USD coupon payments and lingering concern that China’s property boom could implode and the growth engine running out of steam has seen equity markets turning more cautious once again. DAX future currently down -0.1%, FTSE 100 future little changed. FX markets flat – Sterling holds up, JPY weaker – EURUSD at 1.1732 & Cable at 1.3725 USDJPY recovered to 110.50.
Today – German IFO, US New Home Sales, FedSpeak Williams, Mester, Clarida, Powell, George, ECB’s Elderson, BoE’s Tenreyro.
Biggest Mover @ (06:30 GMT) GBPJPY (+0.22%) 3 day rally from summer low at 149.40 continues after Hawkish BOE. spiked to 151.70 earlier. Faster MAs aligned higher, MACD signal line & histogram broke 0 line yesterday, RSI 74.50 OB but still rising. H1 ATR 0.150, Daily ATR 0.695.
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Stuart Cowell
Head Market Analyst
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