Pound Finds Support On Brexit Delay Talk: 5 Things The Global Markets Are Talking About Today

Global equities were trading under pressure in the overnight session, while sovereign bond prices have found a bid as investors pare back a portion of their initial euphoria surrounding the U.S.-China trade talks. The pound found some support after Britain's Prime Minister Theresa May formally supported considering a plan to delay Brexit.

On the central bank front, Federal Reserve Chairman Jerome Powell will deliver his semi-annual testimony on monetary policy and the state of the U.S. economy over the next two days to Congress. In addition, several of his colleagues will also be speaking this week.

President Trump and North Korean leader Kim Jong Un are meeting today for their second face-to-face summit in eight months.

With all this in mind, here are five things the global markets were talking about on Tuesday.

1. Global Equities See Red

In Japan, the Nikkei share average closed a tad weaker overnight, under selling pressure ahead of Japan's fiscal year-end in March. The Nikkei ended the session down 0.37 percent, while the broader Topix shed 0.23 percent.

Australian shares snapped a three-session winning streak overnight, with financials and resources stocks leading broad-based losses. The S&P/ASX 200 index had fallen 0.9 percent at the close of trade, its worst session in nearly eight-weeks. In Korea, the Kospi index traded essentially flat.

In China, stocks fell overnight in heavy volume as a percentage of investors took profits on heavyweight financial shares, believing that Monday's surge is unsustainable. The CSI300 settled down 1.2 percent lower, while the Shanghai Composite Index fell 0.7 percent. The CSI300's rise in Monday's session was its biggest one-day gain in three years.

In Hong Kong it was a similar story. Stocks fell, tracking other regional bourses, as investors waited to see if the U.S. and China can clinch a trade deal. At the close, the Hang Seng index had lost 0.7 percent, while the China Enterprises Index lost 0.8 percent.

2. Oil Eases After Trump Urges OPEC To Curb Prices

Oil prices are again a tad lower, extending yesterday's losses of more than -3% after President Trump called on OPEC+ to rein in its efforts to boost prices.

Brent futures were at $64.70 a barrel — down 0.1 percent from Monday's close — while U.S. West Texas Intermediate (WTI) crude futures were at $55.26 per barrel, down 0.4 percent.

Tweeting yesterday, President Trump expressed his concern about higher oil prices (supported by production cuts) and repeated his previous calls on OPEC+ to keep prices steady.

However, sanctions by the U.S. against oil exporters Iran and Venezuela have contributed to the recent gains and should also provide a floor for prices.

3. French Yields At 2-year Low As "Yellow Vest" Effect Wanes

In this morning's Euro session, France's 10-year government bond yield has dropped to its lowest level in over two years as the effect of the country's "yellow vest" protests fade. Also aiding French bond prices is the fact that French President Macron's popularity has recovered to levels not seen since the protests broke out three months ago.

Elsewhere, broader eurozone yields are under pressure from next week's European Central Banks (ECB) monetary policy expectations.

French 10-year yields have dropped to 0.506 percent — down nearly 2 bps in the session — while the German 10-year Bund yield are hovering atop of the 0.10 percent mark.

4. Sterling Finds Support On Brexit Delay Talk

The pound is rallying after reports that Theresa May has offered a vote to delay Brexit. Sterling was recently 0.7 percent stronger against the dollar.

With a little more than a month to go before the U.K.'s scheduled exit from the EU, lawmakers have yet to settle on a deal with the bloc. On Monday the Labour Party said it would be prepared to back a second Brexit referendum, adding to uncertainty about the path the UK will take in the coming weeks.

5. Hong Kong Exports Down For A Third Consecutive Month

Data earlier this morning showed that Hong Kong's export-oriented economy suffered further from trade tensions as outbound shipments fell year-over-year for a third consecutive month in January.

The headline print showed a 0.4 percent decline, slightly less than December's 0.5 percent drop.

The city's government says the external environment is "still challenging," noting moderating economic growth in many key trading partners will likely weigh on Hong Kong's merchandise exports near-term.

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