Friday 5th December 2019

US

  • On Wall Street, the S&P 500 index rose 0.15% to close at 3,117.43 and the Dow Jones Industrial Average gained 0.10% to finish at 27,677.79.
  • The Nasdaq, which is heavily weighted with technology stocks, was broadly flat, adding 0.05% to finish at 8,570.70.
  • Stocks fell early in the week after President Donald Trump said he wouldn’t mind waiting for a trade deal beyond the 2020 elections. The indexes rebounded Wednesday on a report that Washington and Beijing could be on track for a trade deal before the new tariffs kick in next week.
  • 15th December 2019 is the date when tariffs on another $156 billion in Chinese goods will come into effect.
  • Investors will also be looking for clues into the state of the U.S. economy from the Labor Department’s November tally of hiring by nonfarm employers, to be released later today.
  • The November employment report is expected to show a gain in nonfarm payrolls of 187,000, up from 128,000 in October, also reflecting a temporary boost from returning General Motors autoworkers.
  • Average hourly earnings are expected to tick up 0.1% and economists expect the unemployment rate to hold steady at 3.6%.
  • Reuters consensus poll showed US GDP quarterly growth is expected to be in the 1.6 – 1.9% range through mid-2021, largely unchanged from last month and lower than 2.1% reported for Q3. A key assumption is that the US and China will reach some sort of trade deal.
  • The Fed is seen keeping rates on hold at 1.50-1.75% at its December meeting and staying on the sidelines until at least 2022. That compared to a cut in Q3 2020 predicted in the previous poll and by the interest rate futures market.

Europe

  • London stocks remained weak at the close on Thursday, missing out on a broader market rally, as pound strength weighed on the main index on expectations of a Tory win at next week’s general election.
  • The FTSE 100 was down 7% to finish the day at 7,137.85, however, the FTSE 250 finished the day up 0.2% at 20,707.33.
  • The pound was up 44% against the dollar at $1.32, and up 0.24% against the euro to €1.19. A stronger pound tends to hurt the top-flight index, as more than two-thirds of its constituents derive most of their earnings from overseas.
  • Oil prices were higher at the end of the European day, with Brent crude up 0.73% at $63.46 per barrel, and West Texas Intermediate adding 0.39% to $58.66.
  • In equity markets, paper and packaging group DS Smith was down 7.15%, even after it posted a 31% jump in first-half profit as it reaped the benefits of a rise in online shopping.
  • Clothing label Ted Baker fell 4.57% after the Financial Times reported that the company had appointed AlixPartners to help with a root-and-branch review of its operations following three profit warnings.
  • On the upside, luxury fashion brand Burberry rose 3.12% as shares of luxury coat maker Moncler surged following a report that France’s Kering could be interested in buying the company.
  • Aston Martin Lagonda shares rallied 18.39% following a report that Canadian billionaire Lawrence Stroll – father of Formula 1 driver Lance Stroll – is preparing to make a bid for a major stake in the luxury car maker.
  • By the close of trading, the Stoxx 600 was down 0.13% at 66, the French CAC 40 was broadly flat (rising 0.03%) to 5,801.55. Germany’s Dax was down 0.65% to close at 13,054.80.
  • Economic data out of the euro area was According to Eurostat, in seasonally adjusted terms, over the three months ending in September, the euro area’s gross domestic product expanded at 0.2% pace quarter-on-quarter.
  • Data released by the Deutsche Bundesbank showed that German factory orders fell 0.4% in October following a revised 1.5% increase in September, missing expectations for a 0.3% rise.
  • On the year, factory orders declined 5.5% following a revised 5% drop the month before. However, this was better than the expected 6.1% drop.
  • A Bloomberg survey of economists showed that the ECB is done with cutting interest rates despite persistent downside risks to growth.

Asia

  • Asian markets gained in early trading Friday after a senior Chinese official said negotiations for a phase-one trade deal with the U.S. are progressing.
  • At the time of writing, in China, the CSI 300 was up 0.59% at 3,902.39 and the SSE Composite in Shanghai was up 0.43% at 2,912.01.
  • Hong Kong’s Hang Seng was up 1.14% at 26,516.15 and South Korea’s Kospi was also up 02% at 2,081.85.
  • In Japan, the Nikkei 225 was 23% higher at 23,354.40 but the Topix 100 was broadly flat (up 0.01%) at 1,097.76.
  • In Japan, household spending fell 5.1% year on year in October, worse than the 3.2% decline expected, following 9.5% spike in the prior month.

Bonds

  • 10yr and 30yr US treasuries are currently trading at 1.81% and 2.25% respectively.
  • 10yr UK gilts trade with a yield of 0.77%.
  • German 10yr bund yields trade at -0.29%.
  • 10yr Italian and Spanish bond yields trade at 1.37% and 0.49% respectively.

Commodities

  • The WTI crude oil price is $58.42
  • Brent crude is $63.43
  • The gold price is $1,479.00
  • The silver price is $16.96
  • The COMEX copper price is $2.68

Currency

  • The Yen is trading at 108.63 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.

 

Kind Regards,
The Psigma Investment Team