Capital Idea: European open – 11th November

• Asian stocks run out of steam but global markets remain buoyant

• UK employment data supports BOE rate cut case as FTSE climbs

Asian stocks ran out of steam and reversed as Wall Street’s lead failed to follow through. A lot of it is probably just a function of Asian cash markets having the opportunity to discount the possibility of a re-opened US Government shutdown before the US did yesterday. Although there was some scuttlebutt that the sluggishness in the region might have been due to reports that China is looking to maintain rare earth exports curbs to US companies tied to the country’s military, hinting again that while US-China trade tensions may not go silent, they never disappear.

Nevertheless, the moves in US futures were modest and European stocks have opened in a lukewarm way, with the session looking relatively quiet from a news standpoint again. UK data has supported the FTSE100, with a rise in the unemployment rate to a four-and-a-half year high combined with a surprise easing in wage pressures lending itself to dovishness that crept into the Bank of England’s guidance last week. The market has broken-out to new records and is closing in on the 10,000 point milestone.

(Source: Trading View)

(Past performance is not a reliable indicator of future results)

All else being equal, developments in US politics are likely to be the swing factor in global markets today. Lawmakers are on their way to vote on the stop gap bill that passed the Senate days ago and now heads to the House. Although most of the good news is probably priced-in, a concrete resolution to the shutdown will probably still be a modest boost to market sentiment.