Market Talk- March 14, 2018

All of the core Asian markets suffered from US uncertainty today with closes mostly in the region of -0.5% lower on the day. Continued uncertainty surrounding the growing fears of a trade war is spooking markets everywhere. The Nikkei finished a four day rally with a -0.9% decline. There was not much volatility there today as that was roughly where it opened. Many were discussing the fact it remained above its 25-day moving average, but we were more concerned that the 10-yr JGB benchmark failed to trade! Both Shanghai and Hang Seng both closed -0.5% lower on the day as many discuss the talk of tough trade package the US appears to be targeting. The SENSEX demonstrated outstanding courage regaining all of today early losses to close almost unchanged.
Having hit lows around lunchtime of just under 33.6k, it managed an afternoon rally of some 275 points while key resistance stands at 33,703.

As Mario Draghi re-announced his intension to remain prudent on monetary policy, the fears grew again on the Italian political scene. Matteo Salvini was again vocal of his party’s view that the Euro is a flawed currency. The FTSE MIB did not like the talk closing down over 1% on the day. The news hit BTP’s and weighed on surrounding peripheral bonds. Core DAX, CAC and FTSE managed to close little changed as US markets started to head south. It was probably the clock that saved the day as they tracked US markets lower.

They were holing-in reasonably well then the key leader NASDAQ started to turn and the balance moved in sympathy. Obviously, the key topic was the potential for trade wars talk expanding into action which would be damaging for all concerned. A key example of this today was the shares of Boeing declining 2% which is worth roughly 100 DOW points and so this is a reflection of Chinese money at play between markets. After a healthy start the declines returned as the DOW took centre stage. Closing down 1% with the broader S+P and Russell 2k at just 0.5% lower left the NADAQ at just -0.2% and taking a back seat in all the flurry. It sounded a busy day with a 500 point range in the DOW, but volumes were reasonably light with the VIX climbing 5% with a 17 handle.

Japan 0.04% (No Trade today!!!), US 2’s closed 2.25% (u/c), 10’s 2.81% (-3bp), 30’s 3.06% (-4bp), Bunds 0.59% (-2bp), France 0.83% (-3bp), Italy 2% (+2bp), Greece 4.13% (+3bp), Turkey 12.26% (+4bp), Portugal 1.78% (u/c), Spain 1.38% (u/c) and Gilts 1.44% (-5bp).