Dragon soars
Chinese equities are flying this week as the impact of last week's People's Bank of China rate cut filters through to the market. "There is a lot of action in Chinese equities – it is explosive," says Saxo Bank's head of equities Peter Garnry. "There is a strong trend building here."
The FTSE Chinese A50 Index, which tracks the leading 50 equities, has risen from 7,000 to 8,000 in approximately six weeks helping to send the overall equities sector to an 18-month high. "Banking stocks are going higher and higher and higher," says Garnry, speaking live from the Copenhagen trading floor.
Bleak Friday
Garnry also warns investors to tread carefully in the equities market in the run-up to Black Friday, the traditional online shopping bonanza in the US that follows the Thanksgiving celebration.
"Thanksgiving was actually a disappointment for retailers last year," says Garnry. "Wal-Mart's shares slipped 10% in the two months that followed and although traffic was up, the amount of discounts meant sales were down."
" We could see the same scenario this year, particularly as the likes of Father's and Mother's Day have disappointed this year and we see another weak Black Friday."
Garnry adds he will watch Hewlett Packard closely today after a disappointing sales release yesterday. "It's been in turnaround and it is still not performing tremendously well," he says. "I'm curious to see how it reacts at US open."
Bonds boom
It's quite a story in bonds too.
"There are more exciting things going on in the bonds market," says Fixed Income desk's Simon Fasdal pointing towards the strength in core bonds and in particular 10-year German bonds at 152.41, just shy of the record 152.48.
Fasdal, speaking from Copenhagen, says "there is a lack of negative correlation to equities which indicates good evidence that fresh money is entering the market."
"This is quite late in the equity rally and suggests that there are entrants afraid of missing out on an ECB-ignited Christmas present next week."
The continued speculation that ECB president Mario Draghi will launch a real QE initiative next week and "re-emphasise whatever it takes," will fuel the market going into December, he says.
Forex in party mood
The forex market is very quiet in the run-up to Thanksgiving although the FX desk's Gustave Rieunier anticipates some movement in GBPUSD today after the UK GDP figures are published at GMT 0930.
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