Market Overview

Markets are optimistic but remain weary

The markets remain on cautious positive mood. MSCI for Asia-Pacific region adds 0.4%, continuing gently recover for the second day in a row. American markets feel more confident. On Thursday S&P500 added 0.8%.

However, moderate growth in demand for risks looks like a development of profit-taking rather than evidence of a sustainable markets turnaround. The negative tendencies can again come to the forefront, resuming escape from risks.

The growth of markets is facilitated by the early start of negotiations between China and the United States on trade issues for the first time since June. It is worth noting that the status of officials involved in the negotiations is not very high, which eliminates the possibility of breakthrough decisions in the near future. Obviously, there will be more necessary rounds of negotiations at the highest level to resolve the trade disputes fully. The dynamics of the Chinese offshore yuan is a good indicator of investor sentiment. After yesterday powerful increase by 1.3% to the dollar, CNH have stabilised near 6.87 on Friday morning.

The Turkish lira has added on Thursday in response to the tightening of the country’s Central bank policy and the promises of assistance from Qatar and Germany. Panic has stopped, but still there are not enough reasons for long-term optimism. The U.S. have made it clear that the sanctions imposed on steel and aluminium are a “security issue” and will not be lifted even if the Turks release the American pastor, moreover they threatened with new sanctions. Against this backdrop, the Turkish lira has stopped the recovery rollback and is trading near 5.8.

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