International News (Issue 420) – 07 October 2016
As I discussed above, it was a busy week in foreign markets.
Stronger September manufacturing and service sector data in the US was reported and this, alongside continued strength in oil prices, acted to push US bond yields and the US-dollar higher.
In addition to the better economic data, the fallout from Donald Trump’s performance at the initial Presidential debate also acted as a steadier for the US-dollar.
China was on holiday for Golden Week the entire week, however the domestic Chinese press spent the week discussing the potential emergence of another asset bubble, this time in housing.
Shanghai house prices are up 31% annually to the end of August and it seems that policy-makers are again growing nervous at the indirect consequences of recent stimulatory policy on asset prices.
Lastly in Europe overnight the French President Francois Hollande made a speech calling for the European Union to force a ‘hard BREXIT’ on Britain following its historic June vote to separate itself from Europe.
The speech was significant for markets in the sense that it is the first major political speech to up the ante on the British retreat from Europe since the BREXIT vote and a timely reminder to equity markets that there will surely be significant economic and investment consequences from the exit in spite of the near 15% rally in British shares following the vote.
Overnight the British Pound fell 6% in 2 minutes (!!) after this speech was made, causing huge disruption to global financial markets at or around midnight London time.
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