Wave Of Optimism Sweeps Through The Capital Markets

Overview: Last minutes statements meant to clarify what many MPs find to be the most odious part of the Withdrawal Bill, the backstop for the Irish border is goosed global equity markets even though it does not seem as if the Withdrawal Bill has changed one iota. And after the big rally in US shares yesterday, there might have been follow-through buying in any case today. Asian markets did not disappoint. Nearly all of the major bourses were up over one percent, and several of the larger indices gapped higher, including the Nikkei, Shanghai Composite, the Hang Seng, Taiwan's Taiex, and South Korea's Kospi. Europe's Dow Jones Stoxx 600 also gapped higher but was trying to fill the gap in the morning session. The three-dollar a barrel increase in the price of WTI  the rally in equities appears to be sapping the strength of the bond market. Yields are mostly 1-2 bp firmer. There are a couple of exceptions, UK 10-year Gilt yields are up four basis points, while on the other side of the spectrum Greece's 10-year yield is a couple basis points softer, even after the Eurogroup of European finance ministers delayed the first post-aid package payout due to lack of performance. The funds are expected to be delivered next month. The US dollar is weaker against nearly all the world's currencies. Sterling snapped a seven-day slide yesterday traded almost to $1.33 today after dipped below $1.29 to start the week.  Among the G10 currencies, the Japanese yen is heavier in the risk-on mood, while the Canadian and Australian dollars are also struggling.  Among the emerging markets currencies, the Philippine peso has slid following comments by the central bank governor warned its currency is already strong and seemed to threaten intervention if it got stronger.  

Asia Pacific

Weak South Korean trade data for the first part of March showed yesterday continued to show powerful headwinds. However, other reports suggest Asian trade may have begun improving. Earlier today, the Philippines reported that exports fell less than expected. January exports fell by 1.7%, less than half of what economists expected. Imports rose by 5.8%. Economists expected around a 4% decline. Part of the difference seems to be industry specific. In South Korea, for example, semiconductor exports have fallen by more than a quarter, though today, the semiconductor equities turned in a strong showing.   

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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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