(See Chart Below)
In Asia, almost all of Monday's gains were reversed on Tuesday as early currency overall performance helped to replace stocks. Selling in the Nikkei225 Index ahead of year-end has been to some degree counterbalanced via the Yen’s 1% appreciation. Selling off of, industrials, auto’s and steel suppliers weighed on the Nikkei225 which additionally resulted in restored buying of Japanese Government Bond (JGB).
In Eurozone, the leading news focused entirely on Brexit as well as the decision by the European Court of Justice proclaiming that the U.K. can easily terminate Brexit! At first, this has been good news for Pound and found it rally nearly 1%. However, common sense most likely got into the currency market and discovered that this might very well provide all counterparties commencing their departure only to cancel year and a half later!
For key European indices, it is important to note that Year-To-Date numbers on many of the significant sectors for European indices happen to be alarming, to say the least. Financials, as well as auto market sectors, have been the nastiest with negative returns close to minus 20% while utilities show a small positive return.
American markets opened somewhat sluggish, then sold off. At one phase all main indices have been off close to 3% and once again being guided by the technology sector. The fundamental proximate reason for that has been Cirrus Logic, which pre-announced on Monday night that recent results for this fourth quarter will be 16% lower on account of “recent weakness in the smartphone market."
With that being said, financials weren't that much behind as they were worried about the inverting US Treasury yield curve. First, we saw 3-year, and 5-year notes invert, which in turn steadily worked its way in parallel to 2-year note.
The much-watched 2-year and 5-year notes were a bit below 12 basis points, however, will be much looked at in the course of Friday's Non-Farm employment data launch. We do have a heavy T-Bills calendar schedule for this week, and that is certainly not going to help the cause together with a reduced trading week is likely to embellish volatility to some extent.
On the market closing hour, all key indices did manage a rebound; unfortunately, the shortened trading week, as well as slim volume, have seen much more strain into the closing as doubts of a slowing down economy spreading at some point will hit the USA.
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