 Global stock market rout intensified last week with major indices ended in deep red. Over the week, Nikkei was the worst performing one and lost -5.98%. S&P 500 was the worst one in the US and dropped -3.94%. NASDAQ closed down -3.78%, DOW down -2.97%. In Europe, DAX was the worst, closing the week down -3.06%. CAC followed and declined -2.31%. FTSE was relatively resilient as helped by free fall in Sterling, and closed down just -1.56%. China Shanghai SSE bucked the trend and closed up 1.90%. Flight to safety sent global bond yield sharply lower. US 30-year yield lost -0.067 to 3.317, 10-year yield lost -0.121 to 3.077, 5-year yield lost -0.145 to 2.907. The decline was more serious at the shorter end. German 10 year bund yield dropped -0.101 to 0.362. It was above 0.5 just two weeks ago. Even Italian 10 year yield dropped -0.152 to 3.429. Though, German-Italian spread remains above 300. Japan 10 year JGB yield dropped -0.036 to 0.114, it was at 0.15 a week ago. In the currency markets, Yen ended reasonably as the strongest one on risk aversion, in particular consider that Nikkei was the worst performer. Dollar ended as the second strongest. However, the greenback struggled to extend gains against all but Euro and Sterling. Also given the deepened selloff in the US markets, investors have been paring their bets on Fed's rate path in 2019. The greenback might lost more ground ahead if the coming set of data, ISMs and NFP, disappoints. Canadian Dollar was the third strongest after hawkish BoC rate hike. Sterling was the weakest one on Brexit impasse and there is still no sign that the withdrawal deal could be done 100%. Further, there is even no sign the extra EU Brexit summit would be held in November. However, Sterling's outlook is a bit tricky indeed. NIESR forecast a very aggressive BoE rate path in 2019 should a no-deal Brexit occurs. We'll cover that below. New Zealand Dollar was the second weakest one. Euro was the third as weighed down by Italy-EU budget showdown as well as weak economic data. |
No comments:
Post a Comment