A more buoyant tone is evident throughout asset classes after we heard a more positive tone coming out of the US regarding their negotiations on the looming fiscal cliff, this comes as US president and Congressional leaders voiced their optimism over resolving the issue.
Looking specifically in Asia, we have once again had the Nikkei 225 outperform other regional markets as opposition leader Abe reiterated his dovish stance over the weekend, this has seen the Nikkei 225 hit its highest level since September 20th with USD/JPY hitting its highest level in seven months. Meanwhile, the ASX200 remains in slight positive territory led by the oil and gas sector, with Billabong (+10.4%) a standout performer after reports that director Paul Naude is stepping down to investigate the possibility of a leveraged buyout. Elsewhere in China, the Shanghai Comp. has failed to follow suit and is approaching the key psychological level of 2,000, weighed upon by telecommunication and consumer goods sectors. As a reminder, we did see an aggressive defence of the 2,000 level when the mainland index tested it back in late September of this year and the last time the index has traded firmly below the figure was back in early 2009 during the height of the sub-prime crisis.
In the FX market we had early JPY weakness with USD/JPY hitting a high of 81.59 but much of the move has been reversed in touted position squaring ahead of tomorrow’s Bank of Japan policy announcement. Elsewhere the USD index (-0.14%) has weakened after some positive noises coming out of Washington at the end of last week which consequently has lifted both EUR/USD and GBP/USD.
Taking a look at WTI (+USD 0.61) and brent crude (+USD 0.73) futures we see them trading higher as geopolitical tensions in the middle east dominate sentiment, with comments from Israeli PM, Netanyahu, over the weekend saying they are prepared for a "significant" widening of its Gaza offensive. Reports are that 31 Palestinians were killed in Israeli air strikes on the Gaza Strip Sunday.
Looking forward we have the end of the Bank of Japans first day of their policy meeting where they are expected not to add to their asset purchase program and to keep rates unchanged. Separately, Japanese machine tool orders for October is scheduled for release at 0600GMT/0000CST.
As of 0300GMT:
ASX200 (+0.22%), Nikkei 225 (+1.33%), Shanghai Comp. (-0.5%), Hang Seng (+0.35%), KOSPI (+1.0%)
19 Nov 2012 - 04:00 - Energy Geopolitical - Source: RANsquawk
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