FTSE +3 points at 7240
DAX -24 points at 11540
CAC -2 points at 4885
Euro Stoxx 50 -3 points at 3306
The producer inflation in China accelerated by 5.5% year-on-year in December, the highest pace in five years, amid the Yuan depreciation translated into higher factory gate prices. The consumer inflation remained 2.1%y/y, it could be just a matter of time before higher producer prices are reflected in consumer price inflation.
The Yuan firmed 0.18% against the US dollar on the back of rising speculations for a more hawkish stance from the People’s Bank of China (PBoC). Chinese stocks traded mixed; Hong Kong stocks were in demand on increased appetite from mainland investors. Hang Seng gained 0.58%, while Shanghai’s Composite retreated by 0.35%. Airline stocks lead gains in Shanghai, as China Southern Airlines rallied 9.89% and Air China gained 5.13%.
Nikkei (-0.79%) and Topix (-0.71%) sold off as Japanese investors returned from holidays. The Yen appreciated 0.52% against the US dollar, the USD/JPY traded lower to 115.20 from 116.21. Light call options stand at 115.00. The key short-term support is eyed at 114.52 (major 38.2% retracement on Nov 8th to Dec 14th rally & 50-day moving average).
Afraid to be disappointed, traders unwind their USD long positions ahead of Donald Trump’s ‘general news conference’ due on Wednesday. The focus is on Trump’s economic plans that will certainly hint at higher spending and rising inflation. Trump’s policy could bring the Federal Reserve (Fed) to a tighter monetary policy to counterbalance a potential overheating in the US economy. Although the Trump expectations were mostly priced in, the upside USD risks prevail.
The US dollar softened against all of the G10 currencies, except the Sterling. The GBPUSD slid 0.09% on fears that the UK would leave the single market as part of its Brexit strategy. The FTSE refreshed record, amid the pound weakness pushed the UK’s 100 biggest caps to 7343.76p.
The FTSE futures (-0.08%) outperformed the Euro Stoxx futures (-0.36%) in Asia. The WTI softened to $51.79, yet the industrial metals gained on the back of softer USD and higher Chinese inflation. Copper March futures gained 0.93%.
The DAX (-0.23%) and the CAC 40 futures (-0.46%) hint at a softer European open this morning, while the FTSE 100 is called 3 points firmer at the London open. We could see a positive spin, should the UK mining stocks record a solid start.
The sell-off in the Turkish lira continues as the Turkish parliament votes to pass a bill that would pave the way for a referendum aiming to change the parliamentary regime in Turkey and boost President Recep Tayyip Erdogan’s power at the heart of the government. The USD/TRY extended to 3.7561, the EUR/TRY traded at 4.00 for the first time in history.