Equities Fare Decently In The US Session On Friday And USD Strengthened

Equities Fare Decently In The US Session On Friday And USD Strengthened

Market movers today

On a quiet day on the data front, market focus will be on the signals from the UK and European leaders ahead of the EU summit on Thursday and Friday , when the ambition is to formalise the transition deal. At the summit, the EU leaders are expected to approve the EU’s guidelines for the framework of the future relationship. Based on recent news stories, it seems like an agreement on transition is just around the corner, as only a few issues remain outstanding.

Furthermore, financial markets will also be looking for further signs of tension between the West and Russia over the poisoning scandal in the UK . Over the weekend, Russia expelled 23 British diplomats in a tit-for-tat response following the UK’s expulsion of Russian diplomats last week. Also, global markets will be focusing on the risk of a full-blown global trade war , as US President Donald Trump is likely to announce protectionist measures against China soon.

Finally, attention will start to centre on Wednesday’s FOMC meeting where the Fed is widely expected to hike rates. However, the tone it strikes at Jerome Powell’s first meeting will be interesting. See FOMC Preview: Sticking to three rate hikes signal for 2018 .

No major scheduled events in the Scandi sphere today.

Selected market news

Market focus likely to continue to be on political developments at the start of the week as not only UK-Russian but also US and Japan struggle on that front . In Russia, President Putin secured a 76% win in yesterday’s elections, according to the Kremlin, which also hinted at a high voter turnout due to UK allegations against the country.

Adding to recent US political uncertainty, in a range of tweets over the weekend US president Trump attacked both special counsel Robert Mueller and former FBI Director James Comey . The latter was sacked last spring by Trump and speculation has mounted that Trump may try to oust the former from his investigation into Russian meddling with the 2016 election. This comes after a week in which Trump notably expelled Tillerson as Foreign Secretary.

JPY has appreciated after a poll revealed a significant drop in Japanese Prime Minister Shinzo Abe’s approval ratings after recent allegations of foul play within his cabinet. Recent scandals question his backing among voters ahead of this autumn’s Liberal Democratic Party leadership contest and raises market concerns of whether the current inflation-oriented policy agenda, including the Bank of Japan’s yield curve control, will continue to be pursued.

Equities fare decently in the US session on Friday and USD strengthened, not least after Friday’s stronger-than-expected industrial-production figures out of the US. Treasury yields ended the day a few bps higher with not least the 5Y point giving in. The stronger yen weighed on Japanese equities overnight. Brent crude oil prices remain just off USD66/bbl even after a rise in the US rig count.

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