A similar trading pattern was seen in both the Shanghai and the Nikkei overnight opening at the days lows and positive correction for the balance of the day. The headline that regulators would encourage share buy-backs and promote M+A activity helped restore some much needed confidence to the market. Core China rallied just over 1% giving back a little towards the close. As the currency declined (last seen around 6.97) it pushes the 7 handle more into sight encouraging and balances the equity move. Weaker and weaker fixes have taken it to levels not seen consistently in nearly 10yrs. Trade headlines will continue to dominate tensions going forward, but it certainly looks as though china is planning for both eventualities. Japan’s Nikkei recovered some of Tuesdays decline but only at the expense of the Yen weakness. During the day the currency gathered pace and eventually closed the US session in danger of changing handles to the 113 figure. A decline today of 0.5% gives the appearance this is the start of the next trend. Concerns over global trade and a declining Rupee are hanging over investor confidence in India. As money leaves the emerging market space the SENSEX needs to find domestic support to take-up the slack.
A mixed day for core European indices after weak economic data battled with strong corporate results. Growth slide in Q3 to 0.2% following Q2’s 0.4% which put a bid under core European bond markets. BNP released marginally below expectation and watched its shares close down 2.8% managing a small bounce from earlier losses. On the positive side BP (FTSE listed) posted almost double expectation and closing up 2% on the day. This has provided a 4.5% YTD return and a YOY return of almost 9%. The Euro and GBP are under pressure as we approach the US close. Concerns over growth, Italy (again in the news following more budget headlines), peripheral budgets, BREXIT and the ensuing leadership figure head challenge following Merkel’s fifth term rejection are all combining to pressure the economy whilst the US soldiers on. Italian BTP’s lost another 15bp today following a less than impressive auction result.
