Europe ends daylight saving time! Points to watch for standard time market ～Strategy for October 29～
◎Today's Highlights
1)End of European Summer Time
Starting this week, Europe has ended summer time and shifted to standard time. Until last week, the Tokyo market didn’t move much, but once Europe opened, a direction emerged. If the same pattern continues this week, moves will begin one hour later. This is something to watch carefully!
By the way, the United States, Canada, etc. enter standard time from next week, so this week they remain on summer time (as usual).
2)Germany Hesse State Election
Yesterday (the 28th), voting took place for the Hesse state election in Germany. Hesse is home to the financial city of Frankfurt and is important, but the ruling party led by Chancellor Merkel (CDU) has lost many seats. The far-right party AfD and the Greens have gained seats. There are concerns about Merkel’s influence and centripetal force weakening in Germany, which could also affect Europe. There is concern about a rise of the far right in Europe.
What’s worrying about the far-right trend is that Steve Bannon, who was strategist for Trump’s presidential campaign, is currently working to link Europe’s far-right parties. By connecting parties across borders, if Bannon unites far-right parties across Europe, a renewed far-right shift could threaten the EU’s future. The euro could be negatively affected, so this is something to monitor.
3)Italy Budget Plan
All of Europe is watching Italy’s budget plan. The deadline for resubmission is next week or later, but Italy may refuse to resubmit before then. Regarding the budget, credit rating agencies have downgraded Italy. Italian government bond yields are rising, widening the gap with Germany. The key is the bond yield differential between Germany and Italy approaching 400 basis points; nearing this level could be quite dangerous. This is something to watch closely.
At last week’s ECB meeting, questions about Italy continued. Draghi, at the press conference, said that Italy's problems do not affect neighboring countries, but long-term yields in Spain and Portugal are rising as well. Personally, I feel Italian issues are beginning to impact nearby countries. If concerns about a European debt crisis arise, it could trigger euro selling. This is worth monitoring.
Moody’s downgrade announcement, Italy downgraded! ~FX Explained: What is a rating~
4)Trump's Auto Tariff Remarks
Over the weekend, President Trump said that if Japan does not open its market, a 20% tariff on cars will be imposed. Last week, Japanese stock prices fluctuated wildly and ultimately closed lower. The tariff remark could lead to declines in automobile-related shares and push down the Nikkei Average. Market reaction at the start of the week is something to watch.
In the United States, midterm elections are next week. We should be cautious about Trump’s popularity-seeking remarks. How seriously to take this tariff statement and how the market will respond are both under scrutiny.
◎Today’s Event Schedule
10/29 (Monday)
18:30 GBP: UK Consumer Credit
21:30 USD: PCE Deflator
22:45 USD Evan's Chicago Fed President Speech
10/30 (Tuesday)
09:30 AUD: Building Permits
11:10 AUDBlock RBA Deputy Governor Speech
◎Records Room
Last weekend’s stock prices, interest rates, and statements by key figures are summarized below.
Record Room of October 26 — Interest rates, stock prices, and key statements
