Weak Risk Appetite In Asian Stock Markets
The Asian markets started the week with a weak risk appetite, as the BoJ began its two-day policy meeting. The trading session was nervous, and the volatility reached its year-high on the Japanese stock markets. Currently, the markets expect a 2% inflation target, Yen 10trn extension to the APP and the potential for lower rates on excess reserves. The Nikkei 225 index fell 1.52%, Hang Seng retreated 0.15%, while Kospi and Taiex index lost 0.05% and 0.10% respectively. Yen rallied against all of it major counterparts. USDJPY slipped under 90.00, and hit 89.43 early in the session, while the Japanese 10-year government bond yields retreated. In Europe, the Eurogroup meets in Brussels today. The ECOFIN ministers will discuss on the ways of transmitting the EUR 500bn ESM directly to the banks, bypassing the governments. In Germany, the pro-European minister's Merkel's party lost the control of Lower Saxony, while Democrats and Greens took the majority ahead of the upcoming elections. As released, the German m/m and y/y Producer Prices disappointed in December (m/m PPI -0.3%, vs. 0.0% exp, & -0.1% prev., y/y PPI 1.5%, vs. 1.7% exp. & 1.4% prev). The yield spread between core and periphery bonds widened, as EUR lost against the majority of its counterparts. EURUSD opened the week down, yet got support at 1.3302 early in the session. EURGBP failed to extend gains above 0.84, while EURJPY slipped down 120.00 in a fast move. The European stock futures made a bearish start to the week. The CAC and DAX indexes lost 0.13% and 0.18% respectively, while in US, the political attempt to break the budget impasse revived the risk appetite for shares. S&P500 futures advanced by 0.014%, Dow Jones added 0.004% while Nasdaq's composite futures gained 0.14%.
Today's economic calendar is light. The focus will be on Switzerland's December Money Supply M3, Swiss 3Q Industrial Production, as well as the Canadian m/m Wholsales