No News Is Good News – Investing.com

No News Is Good News – Investing.com

There were no ugly surprises over the weekend, either from the German Federal elections, or, more importantly, the Evergrande (HK:) saga in China. Nor has the surge in oil prices on Friday, that has continued unabated today in Asia, dented equity investors enthusiasm, with Asian stock markets off to a rollicking start to the week.

The German elections have reached an inconclusive result, to the surprise of no one. At time of writing, the ruling Christian Democrats (CDU) are narrowly trailing the Social Democrats. (SPD) Both leaders are claiming a mandate to start coalition negotiations which on the mathematics, will require three parties coming together. That means that CDU incumbent, outgoing Chancellor Angela Merkel, and her government remain in power until a coalition is formed. With an outcome possibly months away, that probably explains why is sharply unchanged at 1.1720.

Markets seemed to be rapidly pricing in Evergrande as a fully controllable outcome that won’t spill over China’s borders into the wider financial universe. Evergrande has not made its $85.0 million US dollar coupon payment due last week, and it has another $47.5 million coupon due this week. It appeared that the 30-day grace period will be used to its fullest.