Outside of the French Credit Downgrade, a Slate of Positive “Event” News Reignites the Risk-on Trade

A thawing tone in the U.S.-China trade war, renewed hopes for an Israel-Gaza truce, and a Japanese coalition deal boost global markets.

Key Takeaways

• Global Events Boost Regional Equities: There were a couple of events overnight that reignited the risk-on trade — though one of them was not the S&P credit rating downgrade of French sovereign bonds. Japan’s LDP managed to cobble together a coalition deal with the Innovation Party (with the Nikkei 225 responding by surging +3.4% to a fresh record high); Israel has announced that the truce with Hamas in Gaza is back on track (the Tel Aviv 35 index was up by as much as +1.0% on the news); there was a “feel good” factor coming out of the array of Chinese economic data overnight; and an apparent thaw over the weekend in the tense U.S.-China verbal trade war also helped reinforce the more positive tone across Asia.