Risk Appetites Join Tokyo On Vacation

Overview: Global equity markets are off to a poor start to the week, and the dollar appears to be enjoying a safe-haven bid. Tokyo markets are closed until Wednesday, while Asia-Pacific stocks tumbled, and the regional index is unwinding last week's gains. The Dow Jones Stoxx 600 is off around 2.7% near midday in Europe. It is the third down session and looks to be the biggest loss in tat lest three months. US shares are also trading around 2% lower. Bond markets are bid, except the periphery of Europe, and the US 10-year yields are about 66 bp. The dollar is strengthening against most of the world's currencies. Among the majors, the yen is resisting, and the greenback is testing the important JPY104 area. In the emerging market currency space, the Mexican peso, South African rand, and Hungarian forint are leading the way lower with more than 1% declines. Gold is heavy and has been sold through last week's lows near $1933. The lower end of the range is closer to $1900. November WTI rallied almost 10% last week and is off around 2% to near $40 a barrel. 

Asia Pacific

China published a list of punishments for companies on its "unreliable list," which includes the restriction on investment and visas. Some companies, like HSBC and Standard Charter are seen as vulnerable, and the shares sold-off sharply. Meanwhile, US President Trump has agreed in principle to the Oracle (12.5%) and Walmart's (7.5%) minority stake in the new US arm of TikTok, though Bytedance would retain control and the technology. Bytedance also said that it learned about the $5 bln "donation" to US education in the media. A US court gave an injunction that prevents the dropping of WeChat from the app stores.

Tensions in the Taiwan Strait escalated as China flew several fight planes and bombers past the mid-point that had been previously respected (1999-March 2019) on both Friday and Saturday. It forced Taiwan to scramble its forces. Beijing has also engaged in "scenario-based" exercises that seemed to have mock attacks on Taiwan. US and Taiwan forces are also in joint military exercises in the area.

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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