Friday 14th December 2018

US

  • US stocks closed mostly lower, after making small moves in and out of positive territory Thursday as investors continued to fret over the lack of clarity and progress in US-China trade talks.
  • On the domestic front, President Donald Trump again criticised the Federal Reserve’s effort to normalize monetary policy.
  • The Dow Jones Industrial Average bucked the trend to finish with a gain of 0.3% to 24,597.38, after rallying more than 200 points at the session high. The S&P 500 edged down 0.02% to end at 2,650.54 and the Nasdaq Composite shed 0.4%, to close at 7,070.33.
  • US-China trade concerns remained at the fore of investors’ minds amid signs that the Chinese were ready to make significant concessions to their industrial policy and reduce tariffs on imported autos. Trump also indicated that he would intervene in the arrest of Huawei’s chief financial officer Meng Wanzhou if it would help ensure a trade deal with China.
  • Trump also said in an interview with Fox News that he hopes the Fed “won’t be raising interest rates anymore.” It was Trump’s latest criticism of the central bank, which is scheduled to meet next week to determine its interest rate policy. Economists projected that the Fed is likely to raise its benchmark rate by a quarter-point to a range between 2.25% and 2.5%.
  • General Electric rallied 7.3%, after the firm announced it would launch a $1.2 billion industrial “internet-of-things” company, and after JPMorgan separately upgraded the stock from underweight to neutral.
  • Delta Air Lines fell 4.8%, after the airline announced 2019 earnings guidance of between $6 and $7 a share.
  • Monster Beverage slumped 7% following UBS’s initiation of coverage of the company with a sell rating.

Europe

  • Europe markets ended mostly lower on Thursday, as investors turned their attention to a European Central Bank meeting and Brexit issues, with optimism over global trade taking a back seat.
  • The Stoxx Europe 600 gave up 0.2% to end at 349.42, after closing up 1.7% on Wednesday.
  • Germany’s DAX 30 edged less than 0.1% lower to 10,924.70, while France’s CAC shed 0.3% to 4,896.92. The UK’s FTSE 100 declined less than 0.1% to 6,877.50, after finishing up 1% on Wednesday.
  • The day’s best performer was Spain’s IBEX 35, which rose 0.8%, while Italy’s FTSE MIB Italy ended 0.5% higher at 19,048.83.
  • The European Central Bank left key rates unchanged, and said it expects policy to stay at current levels through summer 2019. The bank also affirmed plans to end monthly asset purchases at the end of the month, while continuing to fully reinvest the proceeds from maturing securities held on its balance sheet for a period well beyond when it begins to raise interest rates.
  • In a news conference, ECB President Mario Draghi said risks to the Eurozone’s economic outlook remained “broadly balanced” but were moving to the downside.
  • Among the big gainers, German travel giant TUI rose 4.3%, after the company posted a rise in net profit.
  • UniCredit rose 1.2%, while Banco Santander gained 1.5%.
  • Security services company G4S announced it is considering separating out its Cash Solutions businesses, leading to a 6.8% rise.
  • Away from the Stoxx Europe 600, Swiss based GAM Holdings slumped 22%, after the asset manager announced a restructuring program and suspended its 2018 dividend.
  • In oil stocks, Tullow Oil fell by just under 3% and heavyweight BP declined 0.4%

Asia

  • Economic data in Asia weighed on stock markets across the region early Friday, clipping the previous two days of gains.
  • On mainland China, the Shanghai Composite fell 1.5%, while the smaller-cap Shenzhen index tumbled 2.5%. In Hong Kong, the Hang Seng dropped by 1.7%.
  • Japan’s Nikkei 225 slid 2%. Sentiment among Japan’s large manufacturers was unchanged in the three months to December, a central bank survey showed Friday, although they were cautious about their business outlook.

Bonds

  • 10yr and 30yr US treasuries are currently trading at at 2.88% and 3.14% respectively.
  • 10yr UK gilts trade with a yield of 1.26%.
  • German 10yr bund yields trade at 0.26%.
  • 10yr Italian and Spanish bond yields trade at 2.94% and 1.42% respectively.

Commodities

  • The WTI crude oil price is $52.38
  • Brent crude is $61.11
  • The gold price is $1,238.45
  • The silver price is $14.63
  • The COMEX copper price is $2.74

Currency

  • The Yen is trading at 113.57 against the US dollar.
  • The pound is trading at 1.26 against the US dollar.
  • The pound is trading at 1.11 against the Euro.

 

Kind Regards,
The Psigma Investment Team