Equity market rally fizzles out

The euro is holding the gains it made against the dollar following news of the tariff truce between the US and China over the weekend, trading at around $1.14 this morning. The single currency is also a little firmer against sterling at about 89.25p, as the row in the UK parliament over the Attorney General’s legal advice in relation to the Brexit deal weighs on the pound

Yesterday’s rally in equity markets is fizzling out. It has already reversed course in Asia overnight – Japan’s Nikkei index ended its session trading below last Friday’s close – while European indices have opened slightly lower this morning after gaining around 1% yesterday

Bond yields in the core markets have fallen as stocks come off the boil. The benchmark 10-year yield in the US is down the best part of 10bps since this time yesterday to 2.95%, its lowest level since early September, while German 10-year yields are now trading sub 0.30% with UK yields hovering just below 1.30%

Fed Vice Chair Quarles says interest rates are approaching the bottom of their neutral range (which the central bank estimates is 2.5% to 3.5%), adding that how far into the range rates actually go will depend on the incoming economic data

The ISM index of manufacturing activity in the US rose to 59.3 in November, driven by healthy orders books, while the manufacturing PMI in the UK edged up to 53.1, consistent with modest growth in the sector

It’s quiet on the data front today with the construction PMI in the UK the only release of note