MiFID II comes to life, geopolitical tensions cool a little and Trump pushes for wall funding. Here are some of the things people in markets are talking about today.
Day of the MiFID
The biggest shakeup to European financial regulation in a decade comes into force today, a “Big Bang” that will transform the market landscape. This morning, European stock trading volumes are about 25 percent lower than the 30-day average with investors across a slew of asset classes cautious as the new rules take effect.
North Korea used a hotline with South Korea for the first time in two years after Kim Jong Un called for improved relations on the peninsula in his New Year’s Day address. President Donald Trump remains skeptical on the prospect of easing tensions, reminding the North Korean leader that he too has a nuclear button on his desk – and his is bigger – in a twitter post yesterday. In Iran, meanwhile, there were no reports of fresh unrest in the capital amid a heavy police presence as the country’s labor minister pledged to listen to the demands of protestors.
Hitting a wall
Donald Trump is sticking to his call that any deal on spending legislation, which would include protection for young immigrants know as “dreamers”, must provide funding for a border wall with Mexico. Congressional leaders and White House officials plan a meeting later today to set the terms for the coming debate, with some Republicans opposed to the inclusion of immigration legislation in the spending negotiations.
Overnight, the MSCI Asia Pacific Index rose 0.2 percent, while Japanese markets remained closed for a holiday. In Europe, the Stoxx 600 Index was 0.3 percent higher, with retailers and technology firms leading the gains on the first day of trading under MiFID II rules. S&P 500 futures added 0.2 percent, the 10-year Treasury yield was at 2.458 percent and gold slipped.
At 2:00 p.m. Eastern Time, the minutes from December’s rate-hike Federal Reserve meeting will be published, with investors looking for hints of any increased hawkishness amid an uptick in market-derived inflation expectations. Also today, automakers report December sales, with the first annual decline since 2009 expected as higher interest rates start to restrict easy access to credit.