Morning Markets: Draghi underpins global equities rally
- Germany October Trade Balance (0700 GMT)
- UK October Trade Balance (0930 GMT)
- US December U.Michigan Consumer Sentiment (1500 GMT)
If European Central Bank president Mario Draghi intended to keep the global equities rally on course, he managed that with aplomb as the Nikkei briefly hit a year high above 19,000, Dow Jones stretched towards the golden 20,000 and Dax closed the European session up 1.75%.
European indices can expect a fast start Friday. Of the major indices, only the Hang Seng was negative as a continued spotlight on Macau's gaming giants kept a lid on upward momentum.
The ECB's decision to extend its €1.74 trillion stimulus package to the end of 2017 by and large gave the green light to equities bulls already emboldened by expectations of a Trump-led binge on infrastructure, although the bank made a stab at diluting exuberance by pledging to cut the monthly spend to €60bn from €80bn/month from April.
EURUSD's gyrations in the aftermath ultimately landed the pair back more or less where it started in the lower foothills of the 1.0600-50 zone and focus will now turn to the Federal Open Market Committee meeting next week and the coming interest rate rise. USDJPY meanwhile continued to test the resolve of yen acolytes at just beneath the 114.50 mark as the Japanese currency's losing streak shows no sign of reversing set against a backdrop of US 10-year Treasury yields rising to 2.43%.
Opec meets again this weekend with non-Opec producers as they seek to knock a few heads together and get the deal struck in Vienna on November 30 to actually work. Oil is testing higher in anticipation of further clarification and commitments from the likes of Russia with Brent just above $54/barrel in the hour before the European open.
MacDonald's meanwhile is moving from Luxembourg to London tempted no doubt by that 20% corporate tax rate and the desire to escape a more punitive (fair?) regime on the continent. Expect more of this toing and froing over the coming months, although just as many might be looking towards Ireland and its even cheaper rate in a relocation wave to Dublin that some wag has dubbed Canary Dwharf. UK trade data out later nearly six months into the Brexit-vote aftermath could be revealing.
But it's ECB ripples that dominate the agenda Friday. The equities bandwagon rolls on and nothing looks likely to halt the juggernaut until some sobering reality sets in most probably in Q1.
- All Asian markets opened higher except for the Kospi which fell on political concerns
- Hang Seng fell when news of ATM withdrawal limits in Macau sent gaming shares lower
- China's inflation strengthened in November with its CPI up 2.3% from a year ago
- The country's PPI soared to 3.3% in November, well above forecasts
- Japan's BSI manufacturing index rose 7.5 quarter-on-quarter; 3.4 was expected
- Australia's monthly home loans fell 0.8% in October after rising 1.5% in September
- Protectionism poses a threat to SE Asia, says Vietnam PM at Bloomberg's ASEAN summit
- Asian leaders fear an export collapse from Trump's anti-Trans Pacific Partnership stance
- The S&P/ASX200 closed up at 5,560.6, its highest close since August 24
- The US dollar firmed against the yen; it was worth ¥114.5010 at 0148 GMT
- AUDUSD was little changed at $0.7458 after losing about 0.3% overnight
- EURUSD could test to downside with resistance at 104.61
From the Floor
Viennese waltz. “Oil is in wait-and-see mode ahead of tomorrow’s Opec meeting,” says Hansen
Snip, snip. “Increased inflation outlook could see the ECB taper further next year,” says Boye
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
It looks like a quiet data day but that is only a superficial impression as there are some important releases, including the latest US consumer sentiment read, writes Juhani Huopainen.
Aussie ratings watch
If Australia loses its AAA rating after agencies scrutinise its mid-year economic and fiscal outlook on December 19, that will hurt the government, and probably AUDUSD, says Max McKegg.
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Russia may have signed up to last week's oil cut deal in Vienna, but, writes Nadia Kazakova, Moscow's compliance as it hosts a key event Saturday might be more on paper than in reality.
Keynesian-style infrastructure projects form a component of Trump's likely stimulus, make up a key Outrageous Prediction, and have helped swell the global equities rally. Photo: iStock
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