Asia
After a long period of inactivity that allowed Asian markets to push to multi-year highs, the North Korean missile crisis flared up again after another test from Pyongyang. The regime also said that North Korea was capable of reaching the US with a missile.
While the latest developments put pressure on the yen, especially with the dollar strengthening amid new hopes for the tax reform bill going through, the Nikkei managed to add 100 points. South Korea’s Kospi ended the day largely unchanged, a sign that investors in the region are used to shrugging off Kim Jong Un’s latest threats.
China’s CSI 300, which brings together the largest shares of the Shanghai and Shenzhen exchanges, was barely changed on Tuesday’s level, although semiconductor shares were notably weaker.
Europe
The FTSE 100 was under pressure in morning trading after sterling gained on reports of progress in UK Brexit negotiations – the so-called “divorce bill” for leaving the EU could be as much as €50 billion.
While the main index was lower on the day, banks and housebuilders reacted strongly to the potential breakthrough over Brexit. Upmarket housebuilder Berkeley Group (BKG) was the biggest riser, gaining over 3% to £38.26.
After a long-running and acrimonius episode, the head of the London Stock Exchange (LSE) Xavier Rolet said he would step down with immediate effect. The LSE’s shares slid nearly 2% on the news to just over £37 a share. The departure came after a dispute between a hedge fund manager and the exchange’s board – and the Bank of England governor Mark Carney effectively backed the board yesterday as he unveiled the results of the UK bank stress tests.
In Europe, German inflation is due at lunchtime, while French Q3 GDP growth came in exactly as forecast at 2.2% on an annualised basis.
North America
The dollar gained strength on Tuesday night as the Senate budget panel narrowly agreed to send the tax reform bill to the Senate floor for approval.
In the absence of any strong earnings newsflow, the main focus of attention for US investors will be the second estimate for the country’s third-quarter GDP. The forecast is for the economy to have grown by 3.2% in the period on an annualised basis. The first estimate of GDP beat forecasts substantially, so investors are braced for a surprise on the upside for the second estimate.
Fed watchers will also be keen to hear Janet Yellen’s testimony on the economy to Congress. Her likely successor, Jerome Powell, testified before Congress yesterday, arguing that US banks were already very tightly regulated. He also backed the idea that a December interest rate rise was likely.
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