Friday the 13th may not be that lucky for some, but that did not appear to be the case for todays markets. Asia built on yesterdays gains with core markets stronger across the region. The Nikkei closed up +1.85%, with only a little added by the -0.4% depreciation of the Yen. Shanghai appeared to struggle for much of the day only to close down 0.25%. The Hang Seng hit its highs early in the day, then spent the rest trading back close to unchanged. Having seen a less than impressive gain in the SENSEX yesterday, today was probably not really a surprise to see a small retracement.
Europe’s talking point today was centred almost entirely around the Trump/MAY press conference in the UK. Theresa May sounded very positive on the relationship with the US trade potential. President Trump’s clear message out of the address to May was ‘to do whatever you have to do, but please ensure we have the opportunity to trade together’. This turned the GBP as earlier it traded down -0.6% on isolation fears, but recovered upon the press conference conclusion. Core Europe saw gains of around +0.4% as confidence builds and talk of more of the financial centres relocating.
US session opened have retraced all of the overnight strength. Banks earnings missed many expectations and saw their shares lower between 2% and 3% in early trading. However, JPM did manage a bounce back after reflection. Many reduce the shape of the Treasury curve as a comparison to bank earnings. A good question would be if the curve shape is so much of a consideration, why is it only being reflected in banks stocks! US data July Michigan (Consumer) Sentiment 97.1 verses a 98% forecast and again we see more curve flattening continue. Stocks closed with small percentage gains but has been the best week in over four months. Both the DOW and S+P closed other significant psychological numbers 25k and 2,800 respectively. Actually, there is nothing significant about these levels other than the fact many talking are quoting them!
Japan 0.05%, US 2’s closed 2.58% (-1bp), US 10’s 2.2.83% (-2bp), 30’s closed 2.93% (-2bp), Bunds 0.34% (-1bp), France 0.61% (-4bp), Italy 2.54% (-8bp), Greece 3.80% (-3bp), Turkey 17.40% (-35bp), Portugal 1.72% (-1bp), Spain 1.26% (-2bp), and UK Gilts 1.27% (-1bp). Fresh buying seen in todays markets, with news that the Spanish is seeking additional taxation on banking transactions. This will be hotly debated over the weekend and early next week when markets reopen.
