Asian equities hit 20-month lows overnight as nervousness over corporate profits in the United States added to investors' persistent fears about global trade and economic growth.
Aside from "risk-on and risk-off" trading, rate differentials are the name of the game, and with USD/CHF trading atop of its three-month highs, and through parity, would suggest that rate differentials are currently winning out.
The EUR is under renewed pressure after the ECB acknowledged recent weakness being observed in the EU data, but stressed it was too early to know if it was not largely being driven by "transitory" factors, whether they are "country-specific" or relate to the eurozone as a whole, and what is impacting consumer spending and what is not. So far, any spill over from Italy to the rest of the eurozone has been limited.
With this in mind, here are five things thr global markets were talking about on Friday.
1. Stocks Plummet Again
In Japan, stocks posted their biggest weekly loss in nearly nine-months on growing worries over earnings of domestic firms. The Nikkei share average fell 0.40 percent overnight, taking the weekly loss to 5.7 percent. The broader Topix shed 0.31 percent to end the week down 5.7 percent as well.
Down-under, Australian shares closed flat overnight, but ended the week in the red. The S&P/ASX 200 index slumped 4.6 percent this week. In South Korea, shares fell for a fourth consecutive session on domestic earnings worries, the Kospi index tumbled 1.75 percent, leading to a weekly decline of 5.99 percent.
In China, stocks slipped overnight but posted a weekly gain, supported by Government policies and measures to bolster the stock market and the real economy. The blue-chip CSI300 index fell 0.7 percent, while the Shanghai Composite Index ended down 0.2 percent. For the week, the CSI300 index gained 1.2 percent, while SSEC was up 1.9 percent.
In Hong Kong, stocks fell on regional cues. The Hang Seng index fell 1.4 percent overnight, while the Hang Seng China Enterprise index fell 1.7 percent.
2. Oil Falls On Oversupply Worries
Oil prices are heading for a third consecutive weekly loss after Saudi Arabia warned of oversupply, while a global equity slump and concerns about trade clouded the outlook for fuel demand.
Brent crude oil was down 70c at $76.19 per barrel, on course for a weekly loss of more than 4 percent. Brent has fallen close to $10 this month, while U.S crude (WTI) was also down 70c at $66.63, set for a 3.5 percent loss on the week.
After months of concern about shortage of supply ahead of U.S. sanctions on Iran, Saudi Arabia's OPEC governor said on Thursday that oil markets could face oversupply by the end of the year.
However, the markets immediate focus remains on U.S. sanctions and the impact they are having on Iran's oil exports.
3. Sovereign Yields Fall Again
German Bund yields hit a six-week low overnight as investor negativity over Italian budget talks. Disappointing U.S. earnings further supported investor appetite to own sovereign debt.
German Bunds saw their yields drop 2 bps to -0.378 percent — that's 20 bps lower than where it was a fortnight ago.
Italian BTP bonds have also weakened ahead of Friday's ratings review from S&P Global — the agency currently has Italy at a BBB rating with a stable outlook.
Italy's 2-year yields were 4 bps higher at 1.52 percent, and 5-year bonds were up 2 bps at 2.84 percent.
Elsewhere, the yield on 10-year Treasuries ticked down 1 bps to 3.10 percent, the U.K's 10-year Gilt yield moved 2 bps lower to 1.42 percent, and in Japan the 10-year JGB yield decreased 1 bps to 0.111 percent.
4. U.S. Dollar Trades At 3-Month Highs
The mighty U.S dollar was trading atop of its 3-months highs against G7 pairs ahead of Friday's Q3 GDP data.
EUR/USD was trading below the psychological €1.14 area as the Italian budget drama remains the markets focus. The S&P rating decision on Italian debt is seen as a non-event, as talks between Rome and Brussels are receiving more weight.
GBP/USD was little changed as the Brexit impasse continues. Nothing is expected from British side before Monday's budget as members within Prime Minister Theresa May's cabinet argue on the approach to negotiations.
Weaknesses in Chinese yuan fix overnight certainly weighed upon other currencies in the region (AUD, NZD, SGD). China fixed the USD/CNY rate above ¥6.95 for first time in nearly two years.
5. Consumer Climate In Germany Remains Stable
According to market research institute GfK, German consumer sentiment is set to stabilize in November "as a result of inconsistent development in mood."
GfK's forward-looking confidence index is expected to stay at 10.6 points in November, unchanged from October.
The economic expectations sub-index fell to 19.0 points in October from 27.1 points in September, while the income-expectations sub-index retreated to 54.4 points from 57.9 points, GfK said.
The propensity to buy, a gauge of consumers' intention to spend on big-ticket items, rose to 55.9 points in October from 52.9 points in September.
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