The recovery from last week's rout continues
The major European indices are enjoying their 2nd consecutive up day and clawing back losses from last week. The German DAX fell -8.6% last week. Italy's FTSE MIB fell by around -7%. France's CAC and Spain's Ibex fell by -6.4% in the UK FTSE fell by about -5%. It was ugly.
This week has seen a nice rebound in all the major indices in the first two days of the week. The provisional closes are showing:
- German DAX, +2.5%
- France's CAC, +2.4%
- UK's FTSE 100, +2.2%
- Spain's Ibex, +2.6%
- Italy's FTSE MIB, +3.0%
Yesterday, the gains showed:
- German DAX, +2.0%
- France's CAC, +2.0%
- UK FTSE 100, +1.4%
- Spain's Ibex, +2.0%
- Italy's FTSE MIB, +2.2%
A nice start to the week.
In the European debt market, the benchmark 10 year yields are mixed with investors pushing into the more "riskier" countries including Spain, Italy, and Portugal (rates are lower in those countries), while selling Germany, France and the UK (rates are higher in those countries). The spread between German and US yields have seen the spread widen to around 150 basis points.
In other markets as London/European traders exit for the day.
US stock investor are throwing caution to the wind ahead of the US election results. You can argue whether it's Biden or a Trump upset, there will be stimulus one way or the other:
- S&P index is up 78 points or 2.36% 3388.30
- NASDAQ index is up 244 points or 2.23% at 11200
- Dow industrial average is up 680 points or 2.5% at 27603
In the US debt market, yields are higher with the yield curve steepening. The 2 – 10 year spread is up to 71.88 basis points from 68.89 basis points at the close yesterday:
The rise in stocks and bond yields in the US on risk on flows, has pushed the dollar sharply lower (the yen is also sharply lower). The beneficiaries of the USDs fall is the AUD, GBP and NZD. They are all higher on the day.
