Japan Factory Activity Moves Back to Expansion

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From Trading Economics: The IHS Markit/Nikkei Japan Final Manufacturing PMI rose to 50.4 in October of 2016, compared to a flash figure of 50.3 and a final 49.5 in September. It was the first growth since February as output increased for second straight month while new export orders went up for the first time in eight months and new orders fell at a slower pace. Goods producers were also more optimistic towards taking on additional staff, with the rate of job creation picking up to the highest since May. Meanwhile, firms’ margins were improved as cost burdens fell further as a result of lower imported raw material prices.

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In Asian Equity Markets Japanese stocks rose on Monday as global risk asset markets took heart from easing concerns over Deutsche Bank, triggering a relief bounce in financial sector stocks. The Nikkei rose 1.2 percent to 16,640.70 after losing 1.5 percent on Friday. The broader Topix gained 1.1 percent to 1,336.64 and the JPX-Nikkei Index 400 rose 1 percent to 11,970.62. MSCI's broadest index of Asia-Pacific stocks outside Japan rose 0.8 percent. The Australian market added 0.75 percent. Chinese markets are on holiday for the entire week. Japanese data showed confidence at big manufacturers was static in September amid a strong yen and sluggish demand at home and overseas.

In Currency Markets sterling hit seven-week lows on Monday after Britain set a March deadline to begin its exit from the European Union, while the dollar firmed as fears about Deutshe Bank receded and investors looked to this week's U.S. jobs data. Sterling was down 0.4 percent at $1.2941 after it earlier touched $1.2902, its lowest level since Aug. 16. The euro edged down 0.1 percent to $1.1234 remained well above Friday's low of $1.1153. The dollar was last down slightly at 101.38 yen,  but was still doggedly holding above last week's low of 100.085 yen, its weakest since Aug. 26. The Australian dollar edged down 0.2 percent to $0.7647. The dollar index inched 0.1 percent higher to 95.541.

In Commodities Markets oil prices fell away from $50 per barrel on Monday despite an agreement last week by exporters to cut output, with traders doubting the step was enough to rein in production that has exceeded consumption for the better part of three years. Brent crude futures were trading down 0.5 percent, at $49.94 per barrel. U.S. West Texas Intermediate futures were down 0.5 percent, at $47.98 a barrel. Gold edged lower on Monday on a firmer dollar and a gain in equities, with the yellow metal losing its safe-haven appeal as concerns about Deutsche Bank's health eased. Spot gold fell 0.1 percent to $1,314.50 an ounce. Silver rose 0.4 percent to $19.17 an ounce. Platinum fell 0.3 percent to $1,020 and palladium fell 0.2 percent to $718.

In US Equity Markets stocks rallied on Friday, lifted by a rise in Deutsche Bank shares and financial stocks after concerns eased about the health of the German bank.  The Dow Jones industrial average rose 0.91 percent, to 18,308.15, the S&P 500 gained 0.8 percent, to 2,168.27 and the Nasdaq Composite added 0.81 percent, to 5,312.00. Bank stocks boosted the S&P. Bank of America and Citigroup each climbed more than 3 percent and JPMorgan rose 1.4 percent. Goldman Sachs' 1.5 percent increase gave the Dow its biggest boost. Deutsche Bank's U.S.-listed shares jumped 14 percent a day after sinking to a record low.  Eight of the 11 major sectors ended higher. Energy stocks climbed 1.3 percent, with oil prices recording big weekly gains.

In Bond Markets yields on superlong Japanese government bonds fell on Monday as investors registered relief that the Bank of Japan only slightly trimmed its JGB buying, while yields on shorter maturities rose in tandem with U.S. bond yields. The 30-year JGB yield fell 1.5 basis points to 0.440 percent, while the 20-year yield fell 1.0 basis point to 0.345 percent. The 10-year yield rose 1.0 basis point to minus 0.075 percent, off its low of minus 0.090 percent hit last week. The five-year yield rose 1.0 basis point to minus 0.240 percent while the two-year yield rose a half basis point to minus 0.280 percent.

Source: Institute of Trading and Portfolio Management