Although Asian indices opened well on the back of a strong US session, they unfortunately could not hold the levels. Part of the reasoning was the tax Bill would be delayed and having seen the DOW blast through the psychological 24k level many were concerned this delay could threaten Thursday gains. The Nikkei was up over 1% at the open but the uncertainty depleted over half of that gain. The Yen continues to drift with the high 112’s a comfortable trading range as the US markets reopen. Exporters were again leading the way but the weaker currency was a definite factor! Both the Hang Seng and Shanghai indices opened better but the lack of confidence and weak economic data (Manufacturing PMI) added to the uncertainty.
If you needed proof that the US market is currently setting the trend then this week should have been what you were looking for! After US trading hours the news was of a delay to the tax Bill and that hit European markets led lower by tech names with Autos also down. At one stage we saw the DAX trade over 1.5% lower as confidence left in a hurry. The decline was made all the worse with the Euro and GBP joining the weakness. By the close of Friday trading most core (DAX, CAC and IBEX) lost a little over 1% whilst the UK’s FTSE managed just -0.4% decline. Oil did rally following the OPEC commitment closing up over 1.5% on the day.
Fridays US session was a bit of a volatile affair after futures had led us lower following the global reaction to the tax Bill, then the rumour that Michael Flynn had pleaded guilty to misleading the FBI took the positive market negative. The mid afternoon scare soon wore off with prices finishes little off of Thursdays levels. The VIX added 1.5% closing at 11.5 but that should come into play a little more now that retail is finding its way back into the market.
2’s closed 1.78% (-1bp), 10’s 2.37% (-6bp), 30’s 2.77% (-8bp), Bunds 0.30% (-6bp), France 0.6% (-8bp), Greece 5.28% (+2bp), Turkey 11.77% (-19bp), Portugal 1.85% (u/c), Spain 1.41% (-2bp) and Gilts 1.23% (-10bp).