Japanese Stocks Hit Record Highs Following Elections

hurdle again after positive leads from Asia. The Nikkei rallied more than 1% and touched new record highs, after Abe’s victory in this weekend’s election, which paved the way for a continuation of loose monetary policy and underpinned stocks, which sending yen and yields down. The Hang Seng meanwhile underperformed and dropped as Chinese shares in Hong Kong meanwhile headed south after some disappointing earnings reports, and with reports of falling home prices weighing on developers. With the ECB set to confirm its QE extension on Thursday Eurozone markets modestly moved higher though, although the Spanish IBEX underperformed and was down amid escalating tensions in Catalonia. The Pound rose against EUR and yen, which contributed to the underperformance of the index that is dominated by international companies. U.S. stock futures are up while oil prices are moving sideways.

Trump is considering Taylor and Powell for Fed chief and he might have them fill both the Chair and Vice Chair positions, without indicating which order. That’s given the dollar a little lift since he’s agreed to make the decision by next week.

The UK CBI Industrial Trend Survey Shows Declining Sentiment

The UK CBI industrial trends survey highlighted a souring in sentiment, with the balance of the general business situation falling to an -11% reading for the three months to October, down from +5% in the three months to July. However, expectations for total new orders rose to a balance of +20%, which is the most upbeat reading since April. The survey also found that cost pressures remain upbeat.

Brexit remains front and center and while little substantive progress has been made on agreeing to divorce terms, which is a necessity for the EU before it moves on to talk about a future trading relationship and a possible transition period, there appears to be a galvanization in the ranks of diplomats on both sides as the clock ticks on and the pressure mounts. There were reports from the EU summit on Friday that PM May privately told EU diplomats that she is prepared to substantially up the current implied offer of 20 billion euros for the divorce settlement, which gave the pound a lift, though detail has been lacking.

Spanish markets are underperforming as Catalonia tensions rise. Rajoy may have started the legal process to take direct control in Catalonia, but the protests over the weekend and Puigdemont’s declaration that Madrid is preparing to stage a putsch highlights that this conflict is far from over.