Euro optimism subdued on Italy budget progress
By Vincent-Frédéric Mivelaz
Italian Deputy PM Matteo Salvini appears open to discussion on the Italian budget. This has helped European equities, which are giving signs of recovery in early trading. Despite a slight recovery of Italian bonds, with BTP-Bund 10y spreads given at 3.15% and deflating from yesterday 3.27% high, the European Commission will report on all member states’ 2019 budgets. Brussels could implement sanctions on Italy, a move that would be counterproductive for both the single currency and EU equities. For now, EUR/USD is coming back to neutral following yesterday’s drop. Currently at 1.1410, it is headed to 1.1350 short-term.
Growth concerns weigh on stocks
By Vincent-Frédéric Mivelaz
Asian equities have been facing difficulties, however, the bounce in consumer discretionary, health care and tech stocks allowed Chinese shares to bounce back into positive territory. Major US indexes have been declining across the board, losing gains from 2018 amid further drop in the tech sector, as investors remain concerned over disappointing Q3 financial reports. Since the beginning of the year, the Dow Jones Industrial Average is looking at a performance of -1.03%, while both the S&P 500 and the tech stock index NASDAQ remain at -1.19% and +0.08% respectively. Asian indexes remain largely behind, with year-to-date performances ranging from -5.50% (Nikkei 225) to up to -20% (China mainland Shenzhen CSI 300).