Friday 11th October: Asian markets gain amid optimism over U.S.-China trade talks on day two

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Global Markets:

  • Asian Stock Markets : Nikkei up 1.02%, Shanghai Composite up 1.11%, Hang Seng up 2.45%, ASX up 0.91%
  • Commodities: Gold at $1502.55 (+0.11%), Silver at $17.62 (+0.07%), Brent Oil at $60.22 (+1.90%), WTI Oil at $54.47 (+1.72%)
  • Rates : US 10-year yield at 1.665, UK 10-year yield at 0.563, Germany 10-year yield at -0.473

News & Data:

  • (CAD) NHPI m/m 0.10% vs 0.00% expected
  • (GBP) NIESR GDP Estimate 0.50% vs 0.30% previous
  • (GBP) Industrial Production m/m -0.60% vs 0.00% expected
  • (GBP) Index of Services 3m/3m 0.40% vs 0.20% expected
  • (GBP) Goods Trade Balance -9.8B vs -10.0B expected
  • (GBP) Construction Output m/m 0.20% vs -0.40% expected
  • (GBP) Manufacturing Production m/m -0.70% vs 0.10% expected
  • (GBP) GDP m/m -0.10% vs 0.00% expected
  • (EUR) Italian Industrial Production m/m 0.30% vs 0.20% expected
  • (EUR) French Industrial Production m/m -0.90% vs 0.20% expected
  • (EUR) German Trade Balance 18.1B vs 19.4B expected
  • (JPY) 30-y Bond Auction 0.38|3.9 vs 0.14|3.5 previous
  • (AUD) MI Inflation Expectations 3.60% vs 3.10% previous
  • (AUD) Home Loans m/m 1.80% vs 3.60% expected
  • (USD) CPI m/m 0.00% vs 0.10% expected
  • (USD) Core CPI m/m 0.10% vs 0.20% expected
  • (USD) Unemployment Claims 210K vs 215K expected
  • (USD) Natural Gas Storage 98B vs 95B expected
  • (USD) 30-y Bond Auction 2.17|2.2 vs 2.27|2.2 previous
  • (NZD) Business NZ Manufacturing Index 48.4 vs 48.4 previous
  • (JPY) M2 Money Stock y/y 2.40% vs 2.40% expected
  • (EUR) German Final CPI m/m 0.00% vs 0.00% expected

Markets Update:

Asian shares rose on Friday after U.S. President Donald Trump said he would meet with China’s top trade negotiator, stirring hopes for an agreement, while sterling was flat after earlier jumping on optimism over a potential Brexit deal. Despite low expectations going into the first face-to-face high-level negotiations since July, hopes rose that a limited trade deal could be agreed upon after Thursday first day of meetings.

The markets are bullish after a first day of trade talks between top U.S. and Chinese negotiators, characterized by Trump as “very, very good.” Australian shares climbed 0.9%, while Japan’s Nikkei stock index gained 1%. Mainland Chinese shares added 1.11%. Hang Seng is up by a whopping 2.45% as Trump says negotiations ‘going very well’

Investors’ renewed appetite for riskier assets continued to weigh on the safe-haven yen and U.S. Treasury prices, while oil stayed firm on comments about possible supply cuts from the head of OPEC. On Friday, the dollar was little changed against the yen at 107.98 JPY. The move away from safe havens also lifted the yield on benchmark 10-year Treasury notes to 1.665% compared with a U.S. close of 1.656% on Thursday. Yields rose across the curve, with two-year notes yielding 1.5464% compared with a U.S. close of 1.53%.

In commodity markets, oil prices remained higher after the head of OPEC said the organization could take action to balance oil markets, including a deeper cut in oil supplies, and amid hopes that progress toward ending the U.S.-China trade war could help to revive economic growth and lift fuel consumption. U.S. WTI was up 1.72% to $54.47 a barrel and global benchmark Brent crude was up 1.9% at $50.22 per barrel. Gold, which had found its appeal tarnished by rising risk appetite, recovered some ground, with spot gold trading up 0.1% at $1,502.55 per ounce.

Upcoming Events:

  • 12th-17th GMT – (CNY) Foreign Direct Investment ytd/y
  • Tentative – (All) OPEC-JMMC Meetings
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  • 12:30pm GMT – (CAD) Employment Change
  • 12:30pm GMT – (CAD) Unemployment Rate
  • 12:30pm GMT – (USD) Import Prices m/m
  • 2:00pm GMT – (USD) Prelim UoM Consumer Sentiment
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  • 5:15pm GMT – (USD) FOMC Member Rosengren Speaks
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