Stock markets around the globe are bouncing back this morning after taking losses in the latter part of last week. The Nikkei 225 has risen by 125 points this morning as the dollar hits an 11 month high against the Japanese Yen.
Holidays in China and Hong Kong have kept the markets reasonably quiet as Asian equities have focused on local factors, not broader themes.
Financial stocks are not faring particularly well though and this theme is constant around the markets as Italy’s budget woes continue to trouble the investment landscape in Europe and led the local market to its worst day in two years.
In the United Kingdom, Brexit negotiations are heading towards their climax as the prospect of a ‘no deal’ appears to be increasing. Discord amongst key Conservative party members continues to dominate the news and this is doing nothing to help the UK economy. A weak sterling is keeping the FTSE inflated but the economy is struggling compared to other significant competitors, the US, China and Europe. The sooner we have clarity, the better.
In the United States, both the S+P and the DOW closed lower, by 0.6% and slightly over 1% respectively. Investors are now looking forward to 4th Quarter as the third quarter earnings for many companies start to hit the wire. Pepsi Co, Costco and Constellation Brands are all due to report this week.
The DAX has massively underperformed other markets since the highs seen in January. It closed lower by 1.52% on Friday, 0.5% on the week, 1% on the month and 0.5% on the quarter. We will be looking for ways to leverage this underperformance.