Asian markets have extended Friday’s rally with the Nikkei225 adding 82 points and the Hang Seng currently 570 points to the good. These numbers are dwarfed by the Chinese markets that have surged by as much as 4.5% overnight.
Nomura has reported that the Bank of China is to roll out more easing and stimulus measures in the coming month after weaker than expected third quarter growth was reported last week. The markets have reacted in kind and catapulted higher.
Whilst the trend since Donald Trump’s inauguration is still very much bullish, the hurdles that the market has to overcome are increasing in number. The mainstays of rising interest rates and trade concerns are being added to with slowing sales growth in the third quarter. The percentage of companies reporting lack lustre sales growth is increasing. Companies are still benefitting from last years major tax overhaul but the market is questioning what, if anything is left for 2019.
The strength of the dollar is also starting to bite!
In Europe, markets are opening higher after those gains in Asia. Corporate Earnings are on the agenda with a number of companies reporting this week, notably Ryanair and Phillips.
Italy and Brexit remain the main areas of concern, as the pressure on Theresa May continues to ratchet higher and Italian markets remain fragile. Theresa May has to address Parliament later this week and it is very likely that the Italian Budget will be rejected on Tuesday.
I remain short GOLD from last week and continue to run this position
This morning I SOLD DAX futures at 11,664 and bought them back at 11,633, taking advantage of the gap that opened this morning.
I am also short DOW futures at 25,534