Pro-democracy candidates do well
Following heightened doubts last week that Sunday’s district elections would go ahead at all, given the violent confrontations and road blocks that have been a feature in Hong Kong of late, the elections passed peacefully with a record turnout among voters recorded. At the latest count, pro-democracy groups had won 86% of the 444 seats, a sharp increase from roughly 25% won in the last election in 2015. It remains to be seen how Beijing reacts to the results, even though these district elections are considered to be the lowest rung of officialdom.
Risk appetite given a boost
In reaction to the result, Hong Kong stocks surged the most in more than three weeks, reaching the highest since November 12 at one stage. The positive mood, and lack of violence on the day, filtered through into other markets, with U.S. indices rising between 0.25% and 0.35%, China shares advancing 0.93% and the Japan225 index gaining 0.61%.
The same risk-on sentiment was evident in currency markets, with the risk-beta Australian dollar climbing 0.17% to 0.6797, heading for the first positive day in four days. USD/JPY gained 0.11% to 108.77 as the yen’s demand as a safe haven was diminished. The U.S. dollar was marginally lower as the U.S. Dollar Index, a weighted measure of the dollar’s value against six major currencies, fell for the first time in five days.
UK Conservatives maintain lead in surveys
The latest YouGov poll conducted for the UK’s Sunday Times showed the Conservatives’ lead over Labour holding at 42% vs 30%. Separately, the DeltaPoll for the UK’s Daily Mail showed the Conservatives ahead by 43% to 30%, with the third-placed Liberal Democrats at 16%. Meanwhile, the latest poll for the Observer newspaper showed the Tories’ lead at its widest since 2017 at 47% against 28%, with the LibDems at 12% and the Brexit Party at 3%.
The pound has started the week positively, rising 0.1% versus the U.S. dollar to 1.2847, and could be facing its first daily gain in five days. The pair is trading in the middle of a downward-sloping channel which has been forming since October 21.
A slow start to Thanksgiving week
It’s a very small data slate to start the week, with Europe looking forward to Germany’s IFO surveys for November, with the more forward-looking expectations index seen improving to 92.5 from 91.5 in October.
From the U.S. we have two activity indices for November. Firstly the Chicago Fed activity index, which is expected to show a mild improvement to -0.43 from -0.45, and subsequently the Dallas Fed manufacturing index. That probably slid to -11.3 from -5.1 the previous month, according to the latest survey of economists