- Equities trading mixed on China boost and Pandemic worries.
- ECB minutes shift the market mood to euro negative.
- Coronavirus spread declines after the lockdown, in a few countries.
Asia-Pacific markets gave a mixed picture as strong Chinese industrial data and the climbing pandemic numbers in the US and Europe pushed and pulled equities and currencies.
Japan’s Nikkei 225 rose 0.40 Percent extending its 30-year highs; China’s CSI 300 rose 0.95 Percent; Australia’s ASX 200 fell 0.53 Percent as Beijing imposed a 105 Percent hike in anti-dumping duties on Australian wine.
Risk-on currencies like AUD, NZD and NOK generally outperformed even when safe-haven Japanese yen displayed strength.
Chinese data and global growth prospects helped copper to post its highest level since 2014.
Market participants will eye Euro-zone consumer confidence and industrial sentiment in the otherwise light economic docket for the day ahead.
ECB Minutes Ups Chances Of Additional Stimulus
Euro might struggle in the days ahead against its major competitors as the European Central Bank’s minutes of the November policy meeting outlined the consensus among the members regarding further monetary stimulus.
The members expressed the opinion that the sharper slowdown in growth momentum and weakening of inflation than earlier expected along with the deterioration of the balance-of-risks demands more action in the December meeting.
The dovish tone of the members is along expected lines as pandemic worries have forced many countries in the region to adopt strict lockdown measures.
Euro bulls have hope in the viral curve’s notable decline in France, Italy and Spain after the start of current restrictions.
But, the stagnating economic recovery could spell more trouble for the common currency as the numbers show the steepest monthly contraction in business activity since May. Analysts expect Composite PMI to fall to 45.1 in November as service sectors are under pressure.
The economic slowdown might induce the ECB to look beyond the Pandemic Emergency Purchase Program as its primary monetary policy tool.
ECB Governing Council Member Klaas Knot’s latest comments that the bank doesn’t want to exclude any possibility going into December has triggered some speculations on a rate cut. ECB also agrees that additional asset purchase might not be as effective as in the earlier phase for stimulating economic activity.
Even though the signs of a rate cut are feeble than strong, it is better to be lightly positioned ahead of the December 10 policy meeting.