Sentiment improved across Asian markets in the overnight/early morning trading session, extending the relief rallies that began late last week on the belief that the US Federal Reserve will continue its monetary stimulus until past December into the New Year, March being the favored month by many. The MSCI Asia Pacific Index of stocks added 0.2 percent, following a 0.7 percent advance in MSCI’s World gauge at the end of last week.
In the overnight/early morning trading session China’s stock market posted its biggest one-day gain since early September, following reports that the Beijing government is urging officials to keep reforming its economy in order to hit its growth targets.
China’s CSI300 share index posted its strongest daily gain in six weeks after Chinese Premier Li Keqiang said there should be “no slackening” of policies that will ensure the growth targets are met. The CSI300 finished up 1.9% at 2,471.3 points, its biggest gain since September 9th. The Shanghai Composite Index climbed 1.6%.
Reports in official Chinese media said that Li, at a State Council meeting on Friday, urged officials to keep up the pace of making reforms and reiterated that the policy focus will not change. The market responded positively to reports that China’s securities regulator said steps have been added to the approval process for new initial public listings. Investors took that to suggest that the freeze on IPO approvals since late 2012 will not be lifted by the end of this year.
Japan’s trade balance worsens
Japan’s trade balance was in deficit for the 15th consecutive month. Japanese exports fell, improving by only 11.5 per cent versus a year ago, against forecasts of a rise of 15.6 per cent. The weakness signals that a weaker yen, due to the stimulus policy, might not be helping firms as much as the BOJ and Japan’s govt. had initially hoped for. Imports were weaker than anticipated, rising by 16.5 per cent from a year earlier, versus forecasts at 19.9 per cent, suggesting that demand isn’t as robust as anticipated
The MSCI Asia Pacific Index of stocks added 0.2 percent, following a 0.7 percent advance in MSCI’s World gauge at the end of last week. The Nikkei closed up 0.91%, CSI up 1.87% and the Hang Seng up 0.25%.
In September 2013 the index of producer prices for industrial products in Germany fell by 0.5% from the corresponding month of the preceding year. While prices of consumer non-durable goods increased by 2.1% prices of intermediate goods were 2.0% low and energy 1.4% low compared with September 2012. In August 2013 the annual rate of change all over was –0.5%, too.
Euro-area 2012 Government debt at 90.6% of GDP
In 2012, the government deficit of both the euro area (EA17) and the EU282 decreased in absolute terms compared with 2011, while the government debt rose in both zones. In the euro area the government deficit to GDP ratio decreased from 4.2% in 2011 to 3.7% in 2012 and in the EU28 from 4.4% to 3.9%. In the euro area the government debt to GDP ratio increased from 87.3% at the end of 2011 to 90.6% at the end of 2012 and in the EU28 from 82.3% to 85.1%
Market snapshot at 10:15 am UK time
In the overnight trading session the Nikkei closed up 0.91%, the CSI 300 up 1.87% and the Hang Seng up 0.42%. The ASX 200 closed up 0.57%. European markets are experiencing mixed fortunes in the morning trading session. The STOXX index down 0.20%, FTSE up 0.21%, CAC down 0.24%, DAX down 0.10%, with the Athens exchange up the most by 1.56%.
Commodities have also experienced mixed fortunes in the morning session; ICE WTI oil is down 0.60%, flirting once again with the critical psyche level of $100 per barrel at $100.21 per barrel. NYMEX natural is up 0.88% at $3.80 per therm. COMEX gold is up 0.17% at $1316.70 per ounce with silver on COMEX up 0.99% at $22.13 per ounce.
Looking towards the New York open the equity index future for the DJIA is up 0.13%, the SPX up 0.10 and the NASDAQ equity index future is up 0.22%.
Forex focus
The yen fell versus all of its 16 major peers after Japan’s export growth slowed and the central bank governor reiterated his commitment to monetary easing. The yen lost 0.4 percent to 98.07 per dollar early in London. Japan’s currency weakened 0.3 percent to 134.15 per euro. The 17 nation shared currency traded at $1.3679 from $1.3687 on Oct. 18th, when it touched $1.3704, the highest since Feb. 1st.
The U.S. Dollar Index, monitoring the USD versus 10 other major currencies, was little changed at 1,003.16. It slumped by 1 percent last week, the most since the five days ended Sept. 20th, and reached 1,002.65 on Oct. 17th, the lowest close since Feb. 19th.
Bonds
Treasuries cut their three-day advance before the NFP jobs government report tomorrow, in which economists are predicting that the data will show U.S. employers added the most jobs since April last month. The benchmark 10-year yield climbed one basis point, or 0.01 percentage point, to 2.59 percent early in London. The 2.5 percent note due in August 2023 fell 3/32, or 94 cents per $1,000 face amount, to 99 1/4. The yield declined to 2.54 percent on Oct. 18th, the lowest level since July 24th.
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