Depending on what part of the world you are in today, stock markets are either falling due to trade tensions or rising due to trade hopes.
All in all, the differential price action across Asia and European exchanges probably reflects weeks end position adjustments, and markets have been operating in a data vacuum. Prices this week, being driven by headlines, mostly from Washington D.C.
Asia stock markets have had a mixed day with the Nikkei 225 falling 0.80%, the South Korean Kospi falling 1.05% and the Hang Seng falling 0.45%. Mainland China though finished in the green, the CSI 300 rising 0.30%, the Shanghai Composite rising 0. 13% and the Shanghai A50 increasing 0.05%. Given the words “trade worries” have been bandied around all over Asia today, it is surprising that Mainland China bucked the trend. One suspects that ahead of China’s 70th birthday on Tuesday, officialdom there will make sure nothing “untoward” happens to mainland indices.
Europe seems to be using the words ” trade hopes” this morning to explain away the rise in most continental bourses today. The increase by the U.K. FTSE 100 by 0.97% can be easily explained by this morning’s drop in the British Pound. The Dax 30 and IBEX 35 are both 0.50% higher today with the CAC 40 rising by 0.25%. Again, I feel that the rallies are just as easily explained by the EUR/USD being 1.0% lower than the start of the week, at 1.0925 in early Europe.
Currencies are mostly flat in Europe with the FX market looking like it is ready for the weekend already. Only the GBP has moved noticeably today. Bank of England MPC member Michael Saunder’s, gave some very dovish comments about the direction of U.K. monetary policy. It sent GBP tumbling from 1.2325 to 1.2280 which, combined with Brexit uncertainty, leaves Sterling poised to finish the week 1.50% lower against the greenback.