Overview: New actions to contain the virus are being taken in the US and Europe, but investors are looking past it and taking equities and risk assets, in general, higher to start the new week. MSCI Asia Pacific recouped most of last week’s 0.7% loss with gains of move than 1% in Japan, Hong Kong, South Korea, and Australia. Coming fiscal support helped lift the Australian market by more than 2.5%. Europe’s Dow Jones Stoxx 600 is up for a third consecutive session and is nearing the 200-day moving average that has checked the benchmark over the last three months. US shares are trading with a clear upside bias. Meanwhile, yields are edging higher, and the US benchmark 10-year yield is near 71 bp, while European yields are also slightly firmer. The dollar is under some pressure, falling against all the major currencies, but the Japanese yen and most emerging market currencies are also gaining against the greenback. The JP Morgan Emerging Market Currency Index is higher for the fifth session but remains below the 20-day moving average. Gold has straddled the $1900-level, while oil stabilizes after sliding last week. November WTI is within yesterday’s ranges.
Japan’s service and composite PMI were revised from the initial estimate, but both remain below 50. The service PMI was revised to 46.9 from 45.6 after 45.0 in August. The composite PMI is now at 46.6 from 45.5 flash reading and 45.2 in August. The government has indicated it will have a third supplemental budget. Elsewhere of note, South Korea’s manufacturing PMI rose to 49.8 from 48.5, and Taiwan’s rose to 55.2 from 52.2.
Tomorrow’s Reserve Bank of Australia meeting will be followed the following day by the release of the government’s budget. Imagine if US Treasury Secretary Mnuchin was a member