• US equities traded lower yesterday amid ongoing geopolitical tensions
  • China GDP growth slowed down to weakest pace since 2009
  • GBPUSD dropped in the absence of any breakthroughs at the EU Summit

US equities closed in the red yesterday as investors acclimatized to the Fed continuing its gradual policy normalization and as tensions with China and Saudi Arabia continued to put pressure on sentiment. Most of the Asian equities traded higher however, led by a recovery in Chinese shares after the government announced potential support for the market (Reuters)
Overnight, the release of Q3 China GDP showed that economic growth decelerated to its weakest pace since 2009, disappointing market expectations
In response, Chinese officials dismissed the weakness in data and announced that they may support the stock market by allowing bank wealth management subsidiaries to invest directly in stocks (Reuters)
Barclays Research warns that “externally, we continue to see downward pressure on growth largely from unfavourable demand amid a likely protracted trade war”
In FX, the USD rallied across the board except versus JPY as safe-haven demands put downside pressure to USDJPY. EURUSD traded lower amid widening BTP-Bund spreads and ongoing concerns over Italy’s financials
The EU reportedly responded negative to Italy’s budget calling it “unprecedented” (Bloomberg); markets will watch next week’s rating agency reviews of Italy closely
GBPUSD dropped sharply yesterday amid a firmer USD and on the back of continued uncertainty and controversial Brexit rhetoric from negotiators at the EU Summit. This morning, GBPUSD has traded steadily above 1.30 thus far ahead of BoE Governor Carney’s speech at 17.10 BST