Flat trading expected in Asia with US close for Thanksgiving

With the US market closed for Thanksgiving holidays and with European markets slightly down overnight, Asian stocks are expected to open flat today without.

Germany’s 10-year note yield firmed by as much as 12 basis point to 2.26% before falling slightly to 2.20%. Other Euro zone member countries don’t enjoy such support for their debt. Portugal’s 10-year notes are yielding around 12.2%, up 90 basis points overnight as ratings agency Fitch cut the country’s credit rating one notch to BB+ -, the highest junk status available.

Italy continues to be watched closely, with its 10-year note again climbing above 7%, up 14 basis points to last trade at 7.11%. All these developments are important for Asian economies since Europe is such a large customer of Asian exports.

Asian sovereigns are not immune either. Fitch has warned Japan that it must make clear its plant to address public finances as it reviews the country’s own debt rating. While Japan continues to benefit from strong demand for its debt, with rates at near zero percent, Fitch warns this won’t last forever and the growing debt burden is vulnerable to any move in borrowing costs.

Despite this, the Japanese Yen continues to trade strongly with the USD/JPY last trading slightly above 77.10. The Euro continues to see weakness with EUR/USD at 1.3345 at the time of writing.

In Australian corporate news, Federal Treasurer Wayne Swan has approved the acquisition of Foster’s by SABMiller. The approval will see SABMiller gain exposure to the lucrative Australian beer market, using it as a potential springboard into Asian expansion. Swan also approved the acquisition of the remaining 50% of Pacific Beverages joint venture SABMiller has with Coca Cola Amatil.