Asian markets traded mostly lower on the final trading day of the week as investors positioned themselves for an upcoming hectic month. The economic data released overnight did not provide any aid either and investors remained clueless about the long term direction of the markets. If you want to see the investor confidence ticking higher, you have to have an economic data which supports their view and unfortunately, today wasn’t one of those days. The Japanese household spending data came in below the previous reading of 0.0%. The number was -0.4%. Similarly, the Chinese industrial profit number was lackluster as well and the number fell even more. It came in at -1.7%, while the reading before was -0.1%.
Although, the momentum ended on a positive note over in Europe as traders are expecting more stimulus from the European Central Bank, but it did provide very little help for the Asian session. The US markets remain close for national holiday and the focus remains towards the Black Friday sales. Coming Monday and during the European session today, the consumer spending on Black Friday will be very much the main focal point. Black Friday is unquestionably a new thing in Europe, but retailers have adapted to this trend fairly rapidly and aggressive sales strategies are in place to ramp up their revenue.
The geopolitical tensions stand much anchored between Turkey and Russia. Both sides maintaining their stance and blaming each other and missing the big picture. This kind of friction is the last element that you want to see given what is already taking place in the Middle East region. Turkey is undeniably qualm about the consequence of shooting the plane and Russia on the other hand does not fear the consequences as a result of these newly escalated tensions among one of its fruitful trading partners. Back in Europe, the defense sector is gaining more momentum and firms offering their products in this arena are the biggest beneficiary of this utterly ugly and unstable position. A thought of Third World War could take place on the back of the newly escalated situation, during the past few months, is exposing the investor’s portfolio to defense stocks.
In forex arena, divergent monetary policy, which will become even more prominent next month, if two biggest central banks do announce what they have promised, is keeping the selling pressure on the euro. We have said this before, and again, what will be under focus will be if these central banks deliver more or under. This will drive the trading action for the dollar and for the euro. The US Federal reserve bank has mentioned previously and remain consistently concern about the strength of the dollar. A very hawkish approach along with a rate hike could push the dollar even further higher and this will create a much bigger challenge for the US companies, which have played the dollar strength beat several times already.