Morning Markets: A busy session for news and data
- EU: Business and Consumer surveys (1000 GMT)
- Germany: Provisional CPI (1300 GMT)
- US: CPI second estimate (1330 GMT)
- US: Pending Home Sales Index (1500 GMT)
- US: EIA Weekly Petroleum Status Report (1530 GMT)
A busy session awaits as a day already jam-packed with important new data gets some added excitement from a clutch of geopolitical developments including what might be a breakthrough in the Brexit process and the latest rocket adventure by the North Korean regime.
First up, Brexit and news that the British government has agreed in principle to cover its liabilities surrounding its departure from the bloc. No final figure has been stated but it is understood that payments will be spread out over several years and that the final cost to the exchequer could be £50bn-£60bn or higher. Sterling soared against both the dollar and the euro on the news.
While this is a breakthrough in terms of working towards a Brexit deal that is acceptable to both sides it doesn't fully mitigate the risk that the UK might crash out of the union with no deal on its future terms of trade. This is because the bill is just one of three core issues that the EU wants settled before trade talks and there has been no progress in recent days on the other two – the Irish border with Northern Ireland and the status of EU citizens in Britain. The former of these two issues is particularly sensitive and Ireland threatens to veto any Brexit deal that does not make satisfactory provision for it.
Meanwhile, on the other side of the world the North Korean regime has derailed what should have been strong Asian markets following gains in Wall Street yesterday by launching another ballistic missile and claiming that it now has the capacity to hit the US mainland. Pyongyang's latest provocation curbed investor enthusiasm in Asia, leading to mixed results for equities across the region. The Nikkei 225 gained ground, even though Japan's territorial waters were targeted by the test.
Elsewhere, the US anti-dumping case against Beijing over aluminium imports could be a step towards a trade war between the world's top two economies. And if all that isn't enough, worries that Opec and Russia might fail to extend their crude oil production cap at tomorrow's meeting of the cartel is dampening oil prices and unsettling market sentiment.
- Tokyo requested an emergency UN Security Council meeting Pyongyang's missile test
- Despite North Korea's provocative test, Japan's Nikkei 225 headed higher
- The Nikkei 225 closed up 0.49% at 22,597.20
- South Korea's Kospi Composite closed down 0.05% at 2,512.90
- Japan's retail sales surprised by falling 0.2% in the year to October, the first fall in a year
- British and EU negotiators have reached a deal over the "Brexit bill"
- The Senate Budget Committee approved the Republican tax bill
- The US launched an anti-dumping case against Chinese aluminium producers
- Crude prices came under slight pressure ahead of Thursday's meeting of oil producers
- The S&P/ASX200 closed up 0.45% at 6,011.10, thanks to gains for the big banks
- RBNZ said it would ease restrictions on home loans given the recent cooling in the market
- Bitcoin passed $10,000 amid fears of a bubble for the digital currency
- Sterling soared after Britain and the EU agreed on the Brexit "divorce bill"
- The Aussie dollar slipped below 0.76; it was worth 0.7591 at 0652 GMT
From the Floor
Big breakthrough. "Sterling is very bid and I think justifiably so," says Hardy.
Inflation day. "Today's German CPI update is crucial because it directly impacts ECB policy," says Garnry.
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
BHP Billiton says winter curbs on iron-ore production are delaying normal restocking, which could lead to a sudden jump in demand once constraints are lifted, explains Saxo Capital Markets (Australia).
Funding flow fears
The Hang Seng China Enterprises Index has retreated, amid concern Beijing will limit the flow of funds into the territory says Saxo APAC Sales Trading
Britain paying £50bn or more to Brussels. Photo: Shutterstock
Morning Markets goes out on the TradingFloor platform at 0800 GMT, Monday to Friday.
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