Markets are calm, as thin holiday volumes are in play.
Asian traders handed over a soft session. Nikkei (+0.03%) and TOPIX (-0.12%) remained flat, while Chinese stocks were offered despite Chinese government’s announcement of 1.8 trillion yuan worth of spending plan including highway construction and water projects for next year. Hang Seng (-0.28%) and Shanghai’s Composite (-0.25%) ended the session in the red, while infrastructure stocks diverged positively into the close.
Japanese inflation excluding fresh food decelerated at 0.4% on year to November, versus -0.3% year-on-year expected. The core inflation retreated to 0.1% year-on-year, from 0.2% a month earlier. Prices in Tokyo drop the most since February 2013.
The yen remained offered, as Japan’s Chief Cabinet Secretary Suga reiterated the importance of the foreign exchange policy for Prime Minister Abe. Japan’s fight against deflation is clearly not over. Although consumer prices are expected to pick up due to a recent rebound in oil and commodity prices, the Bank of Japan (BoJ)’s 2% inflation target remains a sizeable challenge.
The USD/JPY remained soft amid the soft inflation data revived the BoJ doves. The pair traded in between 117.07/117.46 in Tokyo. There is solid support sub-117.00. The key short-term support stands at 116.55 (major 38.2% retracement on December 8th to December 15th rise), for an extension of the actual bullish formation toward the 120.00 handle.
The euro remained offered in Asia, while the Eurostoxx are flat in, with limited appetite in all sectors.
German financials (+0.02%) lack momentum amid Deutsche Bank (DE:DBKGn, NYSE:DB) agreed to pay $7.2 billion, versus $14 billion mentioned by the US Department of Justice in September. Although the deal does not cover for other litigates including price fixing in the foreign exchange and metals markets, interbank rates manipulation and billions of dollars worth of funds driven out of Russia, last week’s settlement has been a good short-term relief for investors, given that Deutsche Bank needn’t raise capital to cover for legal charges in the immediate future.
In Italy, rescue of banks begin after the Italian government approved €20 billion aid package.
US stocks set for a quiet open
The US stock futures made a quiet start to the week. The Dow Jones is called 9 points lower at the open at 19924. The S&P 500 is seen a touch softer at 2262.