Trade of the Day: Asian stocks broadly higher, Europe weak; gold climbs; US Treasuries, dollar sold
Quote of the Day: “At the cusp of 2020, Indian stock markets look more polarised than its fractious politics! It seems that incremental inflows are mostly chasing less than a dozen stocks. The reasons for this ‘passive flight to safety’ are not difficult to identify. Macro growth has slipped, alarmingly some say, and is not just on a cyclical downtick. High frequency data and core indicators are mostly struggling. Policy reform has been directionally encouraging but messy and inadequate. Government’s efforts to spur capex are sputtering. Modi 2.0 looks like a tougher grind than Modi 1.0, say the detractors,” said HDFC Securities strategists in a market note.
Stock of the day: Citic Securities rose as much as 7.2% after it acquired a securities company and following Beijing’s relaxation of its IPO laws.
Number of the Day:. 750 million euros. The price for AS Roma, the Italian football club, which is nearing a deal to be acquired by a consortium led by US billionaire Daniel Friedkin.
Tip of the Day: “With the broader economic conditions moving arguably in favor of bond markets and regulatory change opening the markets to a wider investor base, we think a key moment is approaching for Chinese fixed income. The government bond market can offer an attractive option for investors looking to diversify their risk, especially as it is reasonably uncorrelated with most developed and emerging market bonds. Authorities are aiming to contain economic weakness through increased spending and easier monetary policy through lower interest rates. This activity should support bond investors.,” said Manu George, Senior Investment Director, Fixed Income, at Schroders.
Asian markets were broadly higher after China’s Commerce Ministry said it had actively responded to Sino-US economic and trade frictions and resolutely safeguarded the interests of the country and the people. The United States and China cooled their trade war this month, announcing a “phase one” agreement that would reduce some US tariffs in exchange for what US officials said would be a big jump in Chinese purchases of American farm products and other goods.
The MSCI Asia-Pacific ex-Japan index rose to its highest since mid-2018 but ended flat. The Nikkei 225 index fell 0.8% and the S&P/ASX 200 was 0.25% lower at close. The Hang Seng index was up 0.3% with gains in insurance, basic materials and property lifting the Hong Kong benchmark.
Trade optimism was not the sole driver. China’s continuing efforts to liberalize its financial system also boosted sentiment. The CSI 300 index rose 1.5% after China on Saturday passed amendments to its Securities Law which once implemented on March 1, 2020, will include provisions to expand registration-based initial public offerings (IPOs), stricter information disclosure requirements and tougher penalties for market violations. The trade war has hastened financial sector reforms in China, where the sense of urgency has intensified in recent months.
Europe is opening on a soft note with the Stoxx Europe 600 Index down 0.4%.
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