Macro-News round-up:
#MarketNews
Wall Street is off: A quiet day with the world’s largest stock market, New York, closed for a holiday.
Friday saw markets close flat, with the SP500 and Nasdaq closing sideways.
Today, the European session seems indecisive, showing some weakness in prices with declines of less than 0.5%.
During the day on Friday, both US and UK data were released.
In the case of the UK, UK GDP grew by 0.3% in November, but output contracted by 0.2% in the three months to the end of November, exceeding the expected decline of 0.1%. For the US, if Thursday’s data showed a pick-up in inflation, Friday’s data actually showed deflation risks, with PPIs falling -0.1 % y-o-y.
Taiwan: Over the weekend, the key event was Taiwan’s elections. The DPP renewed its third mandate, but lost seats in Parliament, which were won by the opposition TPP and KMT. Interestingly, the KMT, a pro-China party, has the second highest share of the vote, with 33.49% of the vote
The reactions of global leaders have been interesting. On the one hand, Europe and the United States have congratulated the democratic process, but have been careful not to mention Taiwan’s president-elect, thus avoiding implicitly admitting that they recognise Taiwan as an independent state.
China, on the other hand, has reminded that the results of the election process are irrelevant. The foreign minister has said that the will of 1.4 billion Chinese is to reunify the Chinese territory, and that nothing will change that. They have also stressed that according to the same results, 60% of Taiwan’s population did not vote for the elected candidate.
On the other hand, the two opposition parties, the TPP and the KMT, called for the revival of trade agreements in services with China. This, coupled with the fact that the party-elect does not have a majority in parliament, will make for a difficult mandate.
Middle East: Overnight from Friday to Saturday, the US and the UK carried out further strikes on Yemeni territory. Today we learn that companies such as Qatar energy announced that they are suspending their shipping through the Red Sea. This follows the suspension of shipping announced by the Chinese company Costco last week.
The attacks have, a priori, highlighted what appears to be a division in the Western bloc. On the one hand, the Netherlands, Austria, and Canada are reportedly providing intelligence support to the US-led coalition. Likewise, Germany, Denmark, New Zealand, and South Korea have reportedly expressed their support for the attacks, but Italy, Spain and France have preferred not to comment on the matter for fear of escalating the conflict.
Crude oil prices, meanwhile, have responded positively to the increased tensions, but prices remain low for the time being, falling back within hours of each event.
Interestingly, US bond yields appear to be falling as tensions rise, reflecting their nature as a safe haven asset in times of uncertainty.
