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EU reportedly to back Croatia, Bulgaria in first step to join the euro

Reuters reports, citing four sources familiar with the matter

Europe

The report says that euro area officials are ready to let Croatia and Bulgaria into the ERM-2 mechanism, in which it would allow both countries to adopt the euro as their currency in the next three years.

Adding that the decision was imminent after a final backing from the bloc’s finance ministers during a video conference that is to follow later today and tomorrow.
The decision is likely to be announced outside market hours and possibly during the weekend, according to the sources.
This would mark the first enlargement of the Eurozone since 2015, when Lithuania joined the currency bloc – which has 19 members currently.

US stocks overvalued, China’s shares more reasonably priced?

Via Bloomberg

I came across an interesting piece on Bloomberg’s market live blog yesterday making a case for Chinese shares offering better value compared to US stocks This was based on the valuations based on a price to earnings ratio. The price to earnings ratio is a widely used metric for investors to decide on a stock prices valuation. It is calculated by measuring it share price vs its earnings per share. A high p/e ration can mean that a companies stock is over valued.

Via Bloomberg If you take a look at the chart below you can see that the Nasdaq has a high blended forward P/E ratio just around the 10 mark compared to the other major indices listed. The forward P/E ratio uses future earnings guidance rather than trailing figures. For a run down on the different types of P/E check out this article here.
Nasdaq
Now the reason for the Nasdaq’s high p/e ratio is that technological stocks have raced higher on the hopes of increased tech spending, Working from home, spending on software and hardware, and increased moves towards digitalisation are all expected to boost profit hopes of the Nasdaq.

The question going forward as we come into earnings season is whether or not the Nasdaq’s increased stock valuation can withstand an overall shrinkage in the US stock market as a whole. On a bargain p/e basis this means Chinese shares may offer a more stable path to ongoing gains given their low valuations.
Shanghai Comp

Nikkei 225 closes higher by 0.40% at 22,529.29

Asian equities see another positive day

Nikkei 09-07

Japanese stocks close higher, following sentiment from Wall Street yesterday, but gains have been tempered with after Tokyo reported a daily record of coronavirus infections – just before the government will relax further restrictions starting from tomorrow.

The Japanese government is expected to announce the easing of restrictions on large indoor events such as concerts and sports, allowing for between 1,000 to 5,000 persons to attend such gatherings or venues to fill up to 50% of capacity (whichever is smaller).
Elsewhere, the Hang Seng is up by 0.1% with Chinese equities pushing more solid gains once again with the Shanghai Composite trading up by 0.9%.
In the currencies space, the dollar is keeping a tad weaker but ranges for the most part remain tight with US futures not hinting at much ahead of European trading.
EUR/USD is looking to keep above recent swing highs of 1.1345-50 though, as the pair trades around 1.1360 levels to kick start the session.