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Nikkei roars overnight

The yen carry-trade looks to be the key driver as the Nikkei reverses its recent run and soars higher...

IFA Event 1

by
Jeremy Batstone-Carr

09.12.2013

European equities set for a bright start following Wall St strong performance on Friday (key psychological index levels recovered).  Note, however, that the key driver is not the US payroll data (stronger than expected), but the all-important yen carry trade.

The trade was very much in evidence again this morning as the Nikkei reversed a run of recent losses and made strong gains.  This, despite Asian press reports indicating the possibility of an upscaling in hostility with China in the New Year over disputed islands in the Sth China Sea.

Staying with China, the w/e saw Chinese exports exceed estimates over November, rising by 12.7% boosting hopes for economic stabilisation.
Over in the US the taper yes / no debate rages on with the NY Times and WSJ taking opposite sides in the debate.  We’ll know after the 17/18 Dec FOMC but our view remains no taper until March at least…if at all!

No follow through from Chinese data in the industrial metals complex.  Copper remains unmoved.  Same in energy where Brent crude holds at elevated levels.

Jeremy Batstone-Carr is Director of Private Client Research at Charles Stanley

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