Markets: Risk-off sentiment has spread – Danske Bank

Unleashed risk-off sentiment has spread through the markets pushing stocks and major yields lower, notes the research team at Danske Bank.

Key Quotes

“Oil price sank, while Europe's periphery spreads widened further. The global sentiment has been weighed by declining Chinese stocks, which lost the rest of their recent rebound, spilling over the contagion to Asian markets.”

“As the EU published 'a negative opinion' on Italian budget, country's spreads started leading widening across the rest of European periphery.”

“In emerging markets yesterday, the Turkish lira was under pressure as domestic politics hit the sentiment: the President Recep Erdogan's AK Party and the nationalist MH Party seem to face a rift. The AKP needs other parties in the parliament to pass laws. The MHP's leader told that he would terminate a voting union with Erdogan. Also yesterday Erdogan got tough on Saudis claiming that the Saudi journalist Jamal Khashoggi's murder was a part of planned operation. (Geo)politics seem to be the main driver for Turkish assets in the near term.”