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Article / 30 September 2016 at 7:00 GMT

Morning Markets: A dose of the autumn blues as Q3 ends




  • Germany August retail sales (0600 GMT)
  • Euro area September Consumer Price index (0900 GMT)
  • US August Personal income & spending, PCE price index (1230 GMT

European stocks are set to limp to a lower close on this final day of September following a soggy Wall Street session and a lower close across Asia's leading bourses, with sharp falls in Tokyo and Sydney in particular amid worries about the banking sector. This new bout of weakness comes as the stronger sentiment inspired by news of the Opec oil deal waned and the market got that sinking feeling that the cartel's ambitious aspirations to boost the price of oil might well founder on the difficulty of actual implementation. In other words, handshakes are the easy part, devising the detailed practicalities is devilishly difficult.

It's rather a quiet day on the economic calendar front with only Eurozone inflation data and US income and spending figures to look forward to. However, both are likely to reinforce the existing narratives in their respective economies: the US still chugging happily along and the Eurozone still struggling to shift into a higher gear.

More exciting will be the Hungarian refugee referendum on Sunday, where the populist administration of Viktor Orban will seek to bolster his standing among his East European fellow travellers who are increasingly objecting to diktats out of Brussels regarding refugees. Orban will likely win the referendum (if at least 50% of voters turn out) but either way this will hardly impact markets. Still, though it's really nothing more than the latest manifestation of the anti-elitist, isolationist and protectionist dogma that is becoming more and more shrill (think Trump, think Brexit) it is nonetheless important in that it will drive another nail into the heart of project that was once European unity.

Market signals

Asian session

  • Crude-related shares in Asia received a boost from the Opec output cut deal
  • The crude oil price rally lifted energy-related shares in Asia
  • But talk of a massive 600 mln barrel stockpile in China could hurt crude prices
  • Fears of spreading banking woes dragged on equities in Asia
  • Japan's Nikkei 225 lost heavily; it was down 1.36% to 16,466.54 at 0445 GMT
  • The Shanghai Composite crept into the green; it was up 0.18% to 3,003.93 at 0505 GMT
  • India's S&P BSE Sensex was up 0.09% to 27,853.82 at 0507 GMT
  • Beijing has warned Tokyo against sending its navy to patrol the South China Sea
  • Disputes in the region must be resolved through international law: Singaporean PM
  • Falls for Australia's big four listed banks dragged Australia's S&P/ASX200 lower
  • The S&P/ASX200 regained some losses; it was down 0.48% to 5,445.20 at 0504 GMT
  • Australian Treasurer Scott Morrison has taken a stand against populist sentiment
  • He says Australia's prosperity depends on immigration, trade and foreign investment
Forex ahead
  • The US dollar gained ground against the yen; it was worth ¥101.2060 at 0509 GMT
  • The Australian dollar lost ground despite a lift in crude prices
  • The Aussie dollar was worth 0.7628 at 0509 GMT

From the Floor

Deutsche woe. “The credit default swap opened at almost 500 which surpassed the previous high from earlier in the year,” says Boye .

Forex dilemma. “There is still no resolution to USDJPY so we look towards next week and the ISMs and September NFP,” says Hardy.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In  opinion

Things fall apart
We live in unusual times, and we are now seeing a breakdown in covered interest parity, which had been something akin to an impregnable law in global finance, says Max McKegg.

Fiscal easing talk
There are mildly encouraging figures in German retail, but any weakness in the economy could drive Berlin and the Bundesbank to consider fiscal easing, says Juhani Huopainen.

Bank fears spread
Asia was in defensive selling mode this morning as fear about Deutsche Bank hit all markets, and the banking sector as a whole, says Saxo's Singapore team.

Out now – Saxo's Quarterly Outlook!
Over the next few days, Saxo Bank's team of expert strategists will publish their thoughts on the coming quarter. Steen Jakobsen, chief economist and CIO, kicks off with his analysis of the US presidential election and the fallout for the global economy. You can also check out a video interview with Steen here

 China's buildup of massive crude inventories to support robust domestic demand for fuel is could have a negative impact on crude prices. Photo: iStock

Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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to make sure you're up to date with the latest developments.


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