Japan Factory Activity Growth Rose to 9 Month High

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From Trading Economics: The IHS Markit/Nikkei Japan Flash Manufacturing PMI rose to 51.7 in October 2016 from a final 50.4 in September while market expected 50.6. It was the highest reading since January, supported by a faster increase in output and new export orders while new orders rose for the first time in nine months. Goods producers were more confident to take on additional workers, with the rate of job hiring picking up to 2-1/2-year high. Firms also benefitted from lower cost burdens, as input prices declined.

Market Snap

Market Opening Wrap

In Asian Equity Markets, Japanese stocks edged up in thin trade on Monday after investors bought drugmakers on hopes for strong mid-year earnings, offsetting weakness in such cyclical stocks as exporters which languished on profit-taking. The Nikkei gained 0.3 percent to 17,234.42 in choppy trade. Shanghai  outperformed, rising over 1 percent as energy and raw material stocks jumped on indications that government measures to slash production capacity had shown signs of some success. The optimism spread to Hong Kong, but gains in the Hang Sang were limited by concerns over continued yuan weakness, as well as a possible U.S. rate hike.

In Currency Markets the US dollar edged up to a fresh eight-month high against a basket of currencies in Asian trade on Monday, buoyed by expectations that the U.S. Federal Reserve will raise interest rates this year. The dollar index, which tracks the greenback against a basket of six major counterparts, added 0.1 percent after rising as high as 98.846, which was its loftiest peak since Feb. 3. On Friday, San Francisco Fed President John Williams said at a mortgage conference that "it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later." The euro was down 0.2 percent at $1.0863 inching back toward Friday's low of $1.0857, its lowest since March 10.

In Commodities Markets oil prices fell early on Monday as Iraq said it wanted to be exempt from any deal by producer cartel OPEC to cut production to prop up the market, and as U.S. drillers stepped up work. Brent crude futures were trading at $51.59 per barrel down 19 cents, or 0.4 percent, from their last close. U.S. West Texas Intermediate (WTI) crude was down 22 cents, or 0.4 percent, at $50.63 a barrel. OPEC plans to reduce production to a range of 32.50 million to 33.0 million barrels per day (bpd), down from 33.39 million bpd in September. That would be harder to achieve if Iraq, which is OPEC's second-biggest producer after Saudi Arabia, didn't participate.

In US Equity Markets the S&P 500 and the Dow were little changed and the Nasdaq advanced on Friday, as a record-setting rally in Microsoft and earnings from McDonald's helped offset a fall in energy and healthcare names. General Electric also weighed on the market, as the industrial conglomerate posted results that topped expectations but cut its full-year revenue target to send shares down 0.9 percent after it touched an 8-month low of $28.33. But gains in Microsoft and McDonald's on the back of their strong quarterly reports helped keep losses in check. Microsoft was up 4.6 percent at $59.90 after hitting an all-time high of $60.45, while McDonald's was up 3.3 percent at $114.20.

In Bond Markets Portugal's 10-year government bond yield fell sharply on Monday to its lowest level in just over six weeks, after rating agency DBRS confirmed the country's remaining investment grade rating that is key for inclusion in the ECB's bond-buying scheme. DBRS maintained its BBB (low) investment grade rating with a stable outlook after the close of markets on Friday, citing Portugal's progress in reducing its budget deficit. Portuguese bond yields, which fell on Friday as investors anticipated the country would keep the investment grade rating, fell further as markets opened on Monday. Portugal's 10-year bond yield was down 9 basis points at 3.11 percent, its lowest level since Sept. 9.

Source: Institute of Trading and Portfolio Management