Markets and sentiment did not do too well in Asia today after the decline in the oil price yesterday. Energy stocks were hit as were commodity relations as we saw mixed data out from China and weaker JPY. China released better than expected Producer Price Index but was countered by slower than expected Consumer Prices.
As a result both Shanghai and Hang Seng lost around 1% each with energy and commodity sentiment dragging markets lower. The Australian ASX was also hit (-0.4%) being dragged by BHP as it lost 5% watching Iron Ore prices decline and all this dragged the A$ back by -0.8%. In Japan, the Nikkei benefitted on the back of a weaker currency when it finally made the break back above the 114 level. As we close the US session, the yen is playing with the 115 handle and the Nikkei futures trade around +0.5%.
Europe opened weaker in sympathy with Asia but all eyes and ears were always going to be focused on Frankfurt and the ECB’s lunchtime conference. Many interpreted today’s meeting as a non-event, but then again it usually is until the Q+A session.
Here was when we heard a little more detail surrounding the ECB’s optimism on global growth. It appears that finally the market has accepted that they actually said they are cutting back their monthly figure by €20bn and now they feel inflation is returning! Immediately, bunds were hit and the spread between US/Germany shrank by 4bp to +216bp. It did not help that treasuries were weak anyway and the end of the weeks supply (30yrs today) came at 3.16% while the 10yrs played with the 2.60% level. All this ahead of the NFP’s tomorrow – could be the end of an interesting week! We doubt this has come in time to stop the March squeeze on the futures roll but maybe they can work their magic to free up some of the spreads being charged for on the runs and the CTD. DAX and FTSE closed down as BREXIT continues to drag, while we saw gains for CAC (+0.4%), DAX (+0.1%)and IBEX (+1.5%).
