Farage Declares Truce With Tories After Being Offered A Peerage, Underpins Sterling

Overview: Global capital markets are calm as investors look for a new catalyst. The MSCI Asia Pacific Index snapped back after posting its first back-to-back decline in a month. All the equity markets were higher, but Australia. The Nikkei, Kospi, and Taiex led the advance with about a 0.8% gain. European shares closed firmly near session highs yesterday, even if still lower on the day, and there has been some follow-through buying today. The S&P 500 is little changed after ending a two-day advance yesterday with a 0.2% loss. Ten-year benchmark yields are firm near three-month highs. US 10-year Treasurys are flat near 1.93%. The dollar slightly firmer against nearly all the major currencies. The New Zealand dollar and the British Pound are paring yesterday's gains. Emerging market currencies are mixed.Eastern and Central European currencies, including the Russian rouble, are under modest pressure, while Asian currencies, led by the South Korean won and the Philippine peso, are mostly higher, including the Chinese yuan, though the dollar remains above CNY7.0. Gold is testing the $1450 area after peaking in early September a little shy of $1560. Light sweet crude oil for December delivery is in the middle of the $56-$58 recent range.  

Asia Pacific

Violence in Hong Kong has increased. More arrests are being made, but there is no end in sight. The council elections on November 24 are at risk, though no official word has been given. All 16 councils are up for election. This is for 452 of the 479 seats. Even though the candidates must be approved, the postponement of the election would likely further antagonize the protests.  

Japan's government is considering tax incentives, according to reports, to promote corporations using their vast retained earnings to buy unlisted companies that are less than ten-years-old. Separately, Japan reported machine orders fell 37.4% in October (year-over-year) after a 35.5% decline in September. Yesterday Japan reported that core machine orders fell 2.9% in September but that the industry outlook for October was better. The October machine orders saw the largest decline since the 10-year low was seen in June (-37.7%). The precipitous decline began in October 2018.

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Read more by Marc on his site Marc to Market.

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