Morning Update Note
Friday 17th January 2020
- Wall Street stocks surged to new records at the closing bell on Thursday, after the US and China signed their “phase one” trade agreement during the previous session. The Dow Jones Industrial Average was up 0.92% at 29,297.64, the S&P 500 added 0.84% to 3,316.81, and the Nasdaq Composite finished 1.06% higher at 9,357.13.
- At the open, the Dow was 180.90 points stronger after closing Wednesday with a new record high of 29,030.22, as investors cheered the signing of the trade deal between the world’s two largest economies.
- Under the agreement, Beijing will buy an additional $200.0bn worth of US goods over the next two years, meaning US exports to China should theoretically rise to $263.0bn in 2020 and $309.0bn in 2021 – marking a record-breaking acceleration of US exports to China.
- However, some analysts still believe that additional tariffs may still be slapped on Beijing despite the signing and have cautioned that there was still a very real threat that trade uncertainties could develop elsewhere, including in Europe.
- Elsewhere, retail sales in the country grew more quickly than expected last month, although according to some economists, the details of the report pointed to household spending coming off the boil.
- Still on data, US business inventories fell more than they had in the last two and a half years in November as sales rebounded, suggesting inventory investment could be a drag on economic growth in the fourth quarter.
- The London’s benchmark remained in the red at the close on Thursday, following disappointing updates from the likes of Pearson and Whitbread, as investors continued to mull over the ‘phase one’ trade deal between the US and China. The FTSE 100 ended the session down 0.43% at 7,609.81, while the FTSE 250 eked out gains of 0.04% to 21,721.23.
- On home shores, the latest survey from the Royal Institution of Chartered Surveyors showed that greater political clarity following December’s general election helped boost sentiment across the UK’s property market. According to the RICS UK Residential Market Survey for December, sales expectations for the next 12 months rose to a net balance of +66%, compared to +35% in November.
- On the corporate front, Pearson finished down 8.89% after the education publisher said full-year adjusted operating profit was set to come in at the bottom end of its guidance of between £590m and £640m and announced the departure of its chief financial officer.
- Whitbread was on the back foot, falling 5.17% after it said like-for-like third-quarter sales fell 1.3% as weak accommodation demand offset a good performance in food and beverages.
- Markets in Asia rose on Friday, as the release of China’s gross domestic product (GDP) numbers showed growth was in line with analyst expectations. China’s GDP numbers which came in on Friday largely met analyst expectations. It announced its economy grew by 6.1% in 2019, meeting expectations even amid a trade dispute with the U.S. Its GDP grew 6.0% on-year in the fourth quarter of 2019.
- China’s growth has been hit by the trade dispute with the U.S., among other factors. But both giants signed a “phase one” deal this week, which included some tariff relief. Data earlier this week also showed that the country’s exports rose for the first time in five months in December, and its imports beat estimates.
- Japan’s Nikkei 225 jumped to a 15-month high earlier in the session, last rising 0.45% to close at 24,041.26. The Topix advanced 0.39% to 1,735.44. Some auto stocks soared. Mazda surged 5.77%, while Suzuki Motor bounced 4.04%. Subaru jumped 4.27%, and Mitsubishi Motor added 2.47%.
- 10yr and 30yr US treasuries are currently trading at 1.82% and 2.29% respectively.
- 10yr UK gilts trade with a yield of 0.64%.
- German 10yr bund yields trade at -0.22%.
- 10yr Italian and Spanish bond yields trade at 1.39 and 0.45% respectively.
- The WTI crude oil price is $58.68
- Brent crude is $64.79
- The gold price is $1,555.50
- The silver price is $18.05
- The COMEX copper price is $2.87
- The Yen is trading at 110.21 against the US dollar.
- The pound is trading at 1.31 against the US dollar.
- The pound is trading at 1.18 against the Euro.
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