Asian Equity Market
The Nikkei took note of the rebound late in Friday’s US session, as it only fell – 0.50% on the day. However, Softbank, in the news since Friday’s expose of them being the Nasdaq whale, dove -7.15%, with the market wary of their large notional exposure to the US tech sector (for more on the trade, refer to yesterday’s update). In China, the SHCOMP dropped -1.87%, while the HSI also declined by -0.43%. Elsewhere, the Kospi rose +0.67% as the Kosdaq saw no ill effects from the recent plunge in the US sector, as it rose to close at new YTD highs
European Equity Market
In Europe, shares opened higher across the board, and did not falter during the session, recording gains of at least +1.30% on the day. The UK’s FTSE 100 was the best performer at +2.39%, as it closed at levels last seen on 02-Sep. The German DAX also had a solid day, up +2.01%, shrugging off the poor showings in Asia.
US Equity Market
US will return today after a holiday, and investors will be on the lookout for any more continuation in the selling of the Nasdaq.
U.S Treasury market was closed on Monday in celebration of Labor Day. Euro zone bond yields rose across the board on signs of an improved global economy and ahead of a week of healthy supply. German 10Y bund yields rose 0.9bps while the Italian 10Y yields rose 3bps ahead of the ECB meeting this Thursday. Japanese government bond yields rose 0.6bps, tracking a surge in their U.S. peers last week on concerns about upcoming auctions and a fall in the U.S. jobless rate. The Japanese market braced for new issues ofits own, with a five-year JGB auction due on Tuesday followed by a 30-year debt tender on Thursday.
Oil markets looked to carve a short-term bottom for front-month Brent as it fell – 1.52%, trading slightly below USD42/bbl, and into possibly short-term oversold territory. Over the course of 6 days, Brent has lost just over 10% from its highs to yesterday’s lows. In base metals, volume was low due to the US holiday. Copper continued its short squeeze from Friday, up +1.18% on the day. Nickel fell -0.70%, as it corrects from the August rally on the back of a strong stainless-steel demand with major Chinese plants stepping up pig iron production. Elsewhere in precious metals, trading was largely subdued for gold (near unchanged), while silver edged lower by -0.29%.
The euro fell on Monday as traders that have pushed the single currency to multi-year highs took a breather and prepared for the European Central Bank meeting on Thursday to see if policymakers will introduce yet more stimulus. The sterling was the biggest mover as it fell -0.85% against the dollar and fell for the 4th consecutive day after UK PM Boris Johnson ratcheted up the chances of the Brexit negotiations with the EU failing. The aussie fell slightly at -0.07%, and likewise the CNH was little changed at 6.8325 per dollar. The SGD fell 0.11% against the dollar on weakening 2020 GDP growth forecast.