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Risk assets vulnerable after weak Wall Street close


Reuters

SYDNEY, Dec 7 (IFR) - Asian risk markets may have a negative bias this morning after Wall Street gave up early gains for a flat Wednesday close and credit spreads widened on both sides of the Atlantic. 

Hopes that the alternative minimum tax will be retained in the consolidated Congressional tax-reform package underpinned technology stocks overnight as the Nasdaq Composite rose 0.21%. 

However, a 1.25% slide in energy shares, following a surprise rise in refined US oil inventories, weighed on the Dow Jones, which slipped 0.16% on the day.

Treasuries were boosted by underwhelming US data releases and elevated geopolitical concerns after President Trump controversially recognised Jerusalem as Israel's capital. US two-year, 10-year and 30-year yields eased 2bp, 2bp and 1bp to 1.81%, 2.34% and 2.73%, respectively. 

Eurozone bourses recovered from initial lows as euro weakness and Wall Street's strong start provided support, but they still ended in the red with the DAX, CAC 40, FTSE Milan and Spanish IBEX shedding 0.38%, 0.02%, 0.49% and 0.27%, respectively. 

The FTSE 100 outperformed for a 0.28% increase as international-focused companies drew comfort from sterling's slippage attributed to the UK government's fraught Brexit negotiations. 

Core European sovereign bonds were in demand as German and UK 10-year yields eased 1bp and 4bp to 0.31% and 1.23%, whereas Spanish and Italian 10-year yields firmed 2bp and 3bp to 1.44% and 1.73%, respectively, amid the general risk-off mood. 

Europe's main and crossover CDS spreads widened 1bp and 7.5bp to 48.5bp and 235.5bp before the US investment-grade and high-yield CDS spreads rose 0.5bp and 3bp to 52bp and 320.5bp, respectively. 

 

China's state-owned , rated BBB+ (Fitch), issued a capped US$300m 4.75% 10-year Reg S bond at Treasuries plus 245bp, 30bp tighter than initial guidance. 

UK telecom company , (Baa1/BBB+/BBB+) could launch a five-year and/or 10-year Kangaroo bond as early as today. NAB, RBC Capital Markets and UBS are joint lead managers on the issue. 

has priced a A$400m (US$304m) issue of Pepper I-Prime 2017-3 Trust Australian RMBS. The A$131m Class A1-S notes, with a 0.8-year weighted-average life, priced in line with one-month BBSW plus 70bp area guidance, while the A$189m Class A1-L notes, with a 3.0-year WAL, priced at the tight end of one-month BBSW plus 120bp-125bp area talk. 

The A$48m Class A2 and A$12m Class B notes, with WALs of 3.0 and 3.4 years, priced at one-month BBSW plus 160bp and 190bp, 10bp inside 170bp area and 200bp area guidance. 




This article appears in: Stocks , Politics


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