Even as Chinas trade expanded, it really has done nothing for stock market confidence or sentiment, especially after the poor auto sales numbers. We saw more selling pressure today as the Shanghai core index closed 1.4% lower, with the Hang Seng under even more pressure resulting in a 2.4% decline. Money is still leaving the emerging market space and even the currency is experiencing the pressure. The CNY is again challenging the higher levels seen recently but is yet to breach the psychologically important 7 handle. Rumors are that CNY Put Options north of this number have been extremely well bid recently and talk that a lot has been spent on its defense – price movement looks to back these rumors. In Japan, the Nikkei was also lower as tech, energy, and basic resources all adding to the 1% decline. Again, worth keeping a watchful eye on the Yen next week, as again we have failed to see a safety flight given the recent regional uncertainty. The SENSEX held in well for much of the day closing with just minor losses. Despite the concerns raised by Moody’s, upcoming 2019 elections and a weakening currency the India market and currency have held in reasonably well – so far, but has been benefiting from the oil price decline.
Although Europe was quiet it was lower initially in sympathy for global markets but then found old issues repeating. The Italian Treasury have announced they have no intention of shrinking its budget demand, mostly responding to the comments made by the EU on Thursday. Italian 10yr BTP yields were a touch wider whilst core Bunds tightened 5bp as the flight to safety still exists in Europe; FTSE MIB closed down 1%. BREXIT was again hitting headlines in late trading after the UK Junior Transport Minister Jo Johnson (brother of Boris) resign from office claiming Theresa May was not following what the people voted for. Both GBP and the Euro lost ground on this resignation but Sterling lost most – last seen down -0.75%.
