News that President Trump’s personal lawyer claimed he was instructed by the candidate to commit a federal crime and, separately, his the former campaign manager was found guilty on eight counts is hardly impacting the global capital markets.
The dollar is narrowly mixed in consolidative trading after extending the correction that began last week. The Dollar Index held the small head and shoulders top objective near 95.00, but there has been little recovery, considering that last week’s low was a little shy of 97.00. Still, the dollar’s correction may not be complete.
Asian equities got to react to the news first, and the MSCI Asia Pacific index rose 0.45% to extend its streak to four consecutive advances. Most markets in the region moved higher, with the noted exception of China and Australia. There are public holidays in several markets including Indonesia, Singapore, and Malaysia. The Shanghai Composite had advanced in the first two sessions of the week amid reports of encouragement by officials, which was not seen today, and the market gave back a little more than a third of the two-day gains.
The S&P/ASX200 slipped 0.3% as it continued the pullback that began yesterday after reaching a 10-year high. Prime Minister Turnbull who turned back one leadership challenge yesterday faces additional pressure> No Australian Prime Minister has finished a complete term for more than a decade. While US politics do not seem to be weighing much on the US dollar, but the Australian dollar is the weakest of the majors, off about 0.25% (~$0.7350). There is an A$619 mln option struck there ($0.7250) that expires today.
European shares are mixed, leaving the Dow Jones Stoxx 600 little changed. Most sectors are advancing, led by real estate, energy, and the financials. Utilities and consumer staples are the major offsets. The bond market is more interesting today, Of note, Italy’s bonds continue to recover. The 10-year yield rose from near 2.45% in mid-July to 3.20% last week amid renewed concern about the government’s fiscal plans. Today is the third consecutive decline, and the yield has returned to the 20-day average near 2.93%. The better performing sovereign bond market is helping steady the bank share index, which is extending yesterday’s recovery and is more than 3% above the lows set on at the end of last week. Peripheral European bonds markets are firmer. German Bunds are flat.
