US equities look set to move higher in post-Christmas trade, following a generally positive session in Asia, while Europe remains closed for the holiday.
Mainland shares in China have managed to claw back all of Monday’s 1.4% loss, the worst session in six weeks. 10-year yields in China have fallen for six consecutive sessions, as the promise of more liquidity beckons. The overnight repo rate dropped for a seventh day to the lowest in a decade.
Notably, the Shanghai Composite is higher by nearly 5% in December, the best monthly performance since Q1, when mainland shares staged a rally so absurd that “bubble” talk started up again and some feared authorities in Beijing would avoid stimulus in an effort not to encourage speculation in domestic equities.
In Japan, the Topix managed to snap a six-day losing streak. A quick look at the index reminds me that in August, the gauge had wiped out its 2019 gain as the yen surged amid safe haven flows tied to the trade escalation. Fast forward to December and it’s on track to rise more than 15% for the year.
Notably, the Topix is on track to outperform the S&P (barely) for the second straight quarter. Q3 was the first quarter of outperformance since Q4 of 2017.
Meanwhile, Turkish equities have exploded higher of late. The Borsa Istanbul is up eight weeks in a row, following the “resolution” (if that’s what you want to call it) of the Syria debacle.
Never one to shy away from controversy, President Erdogan is now set to send troops to Libya, where another manifestation of the proxy dispute between the UAE, Egypt and Saudi Arabia on one side, and Qatar and Turkey on the other, continues to rage.
