Asian stocks posted their biggest gains in two weeks on Tuesday early trading as investor sentiment was boosted by robust U.S. economic data. Global risk sentiment pushed back after plunging on news of Renzi’s fallout. On Tuesday, Asian Markets noted fresh record highs following a services sector report showing further strength in the economy. In the U.S. the services sector activity hit a one-year high in November, with a surge in production boosting hiring, following a strong NFP report on Friday last month. It is also worth noting that traders now see a 93 percent chance the Fed will raise rates by a quarter point to 0.50-0.75 percent next week!
In today’s Asian Markets most indices closed on a bullish note with Japan’s Nikkei up by 1.1 percent, Hang Seng adding 0.6 percent, Korea’s KOSPI up by 1 percent and India’s Nifty climbing 0.01 percent as of 8:32. Financial shares in China weakened however, after the country’s insurance regulator suspended an unlisted insurer for indulging in “barbaric” share acquisitions by using unidentified asset managers.
German factory orders jumped 4.9% in October vs. estimated gain of 0.6% an increase largely led by a 7.2% jump in orders for investment goods. The surge suggests growth in Europe’s largest economy will accelerate at the end of the year. The Economy Ministry in Berlin showed on Tuesday that the increase in orders was the biggest since July 2014, gaining 6.3 percent from a year earlier. The report comes to confirm estimates that Germany’s economy is gathering pace after a slowdown in the third quarter. It is also worth noting that business sentiment held at the highest level in more than two years in November, while unemployment remained at record lows.
OPEC oil output set another record high in November ahead of the deal to cut production. Supply rose to 34.19M barrels per day last month compared to 33.82M barrels per day in October, meaning OPEC will have a harder time implementing sufficient cuts in order to tackle oversupply. Oil output has thus reached a record high ahead of an OPEC cut deal. It is also worth noting that OPEC members are meeting non-OPEC countries, including Russia, later this week to determine the details of the output cap. In today’s energy markets Crude Oil futures lost 1.1 percent to last trade at $51.23 while Brent Oil futures lost 0.7 percent to last trade at $54.56 as of 8:50 GMT
The European Stock Market opened higher today as concerns over political instability eased and investors await clues on the upcoming meeting of the European Central Bank. Monday’s crisis seems to have subsided as Italian Prime Minister Matteo Renzi has agreed to delay its resignation until the country’s 2017 budget is approved. The Prime Minister’s decision to remain in power has eased concerns of early snap elections following the government’s defeat in a referendum. However, it should be noted risks to the banking system continue as Italy’s Banca Monte dei Paschi di Siena has been told to prepare for a state bailout with the bank’s shares falling by as much 2 percent at the open. In today’s European stock indices trading, Germany’s DAX added 0.1 percent, U.K.’s FTSE 100 traded flat, France’s CAC advanced 0.2 percent while the Euro Stoxx 50 added 0.4 percent as of 9:00 GMT.
In other news, shares of IG Group tumbled more than 20 percent on Tuesday following reports that the Financial Conduct Authority announced tougher rules for Contract for Difference (CFD) products. European finance ministers are gathering in Brussels Tuesday morning while analysts are expecting ECB President Mario Draghi to announce Thursday an extension to the bank’s bond-buying scheme for another six months.