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On 29 November 2019 - US, Europe, Asia off on renewed US-China worries

Anne D Picker

Anne D Picker - Econoday

China angered after Trump signs US law backing Hong Kong protesters.

US markets

US equities slipped Friday on concerns over US-China relations, and worries about US-China trade talks, after President Trump signed a law supporting Hong Kong’s pro-democracy protesters and threatening to sanction Chinese officials. The Dow industrials fell 0.4 percent, the S&P 500 declined 0.4 percent, and the NASDAQ was off 0.5 percent.

China threatened unspecified retaliation in response to the US bill supporting Hong Kong’s protesters, which was approved with veto-proof support in Congress. Earlier this week, markets rallied on a series of reports pointing to a near-term phase-one US-China trade pact.

A Reuters report Friday that the US may again limit US firms from doing business with Chinese telecom Huawei added to concerns and hurt risk assets, including stocks and commodities, including oil, while gold prices gained.

Oil prices were hit after Russia’s energy minister called for a delay in oil output controls. Investors were awaiting news on US holiday shopping as a sign of the consumer’s health including a readout on Black Friday and Cyber Monday sales next week.

Energy, materials, and consumer discretionary sectors were the weakest performers, while health care, technology, and financials outperformed. Among energy stocks, exploration and production leader Apache was off 4.1 percent.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$1.72 to US$62.43, while gold rose by US$9.00 to US$1470.40. The US dollar declined against most major currencies. The US Treasury 30-year bond yield rose 1 basis point to 2.20 percent while the 10-year note yield rose 1 basis points to 1.78 percent.

European markets

Most major European equities indexes declined Friday on worries over US-China relations, despite some upbeat European economic reports. The Europe-wide STOXX 600 slipped 0.4 percent, the German DAX eased 0.1 percent, the French CAC declined 0.1 percent, and the UK FTSE-100 fell 1.0 percent.

Risk assets declined on worries about prospects for a US-China trade deal after China rebuked the US after President Trump signed a bill that would sanction China over its treatment of Hong Kong protesters. Trump softened the blow by issuing a statement speaking of his respect for China’s leaders and suggesting he may not implement the measure.

Trade-sensitive sectors including mining and autos were hit hardest, along with oil & gas, and banks. Outperforming were telecom, technology, utilities, and media. Among companies in focus, DNB, a Norwegian bank, dropped 9.2 percent on news of potential legal trouble.

In economic news, Eurozone inflation accelerated in November, its first increase since June. At a 1.0 percent annual rate, this month's outturn was up 0.3 percentage points versus October's final reading and on the strong side of market expectations. It was also a 3-month peak, albeit still some 0.4 percentage points short of its mark at the start of the year. In a separate report, German unemployment unexpectedly fell in November. Following a smaller revised 5,000 increase in October, joblessness dropped 16,000 to 2.266 million, only its second decline since April. However, the slide was shallow enough to leave the unemployment rate unchanged at October's 5.0 percent.

Asia Pacific markets

Major Asian markets closed lower Friday, with results mixed on the week. Hong Kong’s Hang Seng index was the weakest performer both on the day and on the week, with declines of 2.1 percent and 0.9 percent respectively, perhaps reflecting concern about the potential impact of US legislation expressing support for Hong Kong protests. With US markets closed Thursday and the regional data calendar light on Friday, moves elsewhere in the region were relatively modest. Australia’s All Ordinaries index outperformed most other regional indices, falling 0.3 percent on the day and gaining 1.9 percent the week, while the Shanghai Composite index fell 0.6 percent on the day and 0.5 percent on the week. Japan’s Nikkei and Topix indices both closed down 0.5 percent on the day, reducing gains on the week to 0.8 percent and 0.5 percent respectively.

Japanese data published Friday showed weaker industrial production growth but steady unemployment in October. Industrial production fell 4.2 percent on the month after increasing 1.7 percent in September, broadly in line with PMI survey data that indicated weaker conditions in the manufacturing sector that month. Weaker growth in October followed a surge in spending by consumers in September ahead of an increase in consumption tax rates at the start of October. Japan's unemployment rate was unchanged at 2.4 percent in October, in line with the consensus forecast. The unemployment rate has been at or below 2.5 percent since the start of 2018.

India's gross domestic product increased 4.5 percent on the year in the three months to September, down from growth of 5.0 percent in the three months to June and below the consensus forecast of 4.7 percent. This is the fifth consecutive decline in year-on-year growth and the weakest growth seen since early 2013. With the Reserve Bank of India having already cut policy rates by more than 100 basis points in recent months, the weakness in economic activity shown in today's data likely boosts the chance that further policy easing will be considered at the next meeting scheduled to take place next week.

Looking forward

Central Bank activities

Dec-03

Australia

RBA Policy Announcement

Dec-04

Canada

Bank of Canada Policy Announcement

Dec-05

India

Reserve Bank of India Policy Statement

The following indicators will be released this week...

Europe

 

 

Dec-02

Eurozone

PMI Manufacturing Index (November)

 

France

PMI Manufacturing Index (November)

 

Germany

PMI Manufacturing Index (November)

 

Switzerland

Adjusted Real Retail Sales (October)

 

UK

CIPS/PMI Manufacturing Index (November)

Dec-03

Eurozone

PPI (October)

 

Switzerland

CPI (November)

 

UK

PMI Construction (November)

Dec-04

Eurozone

PMI Composite (November)

 

France

PMI Composite (November)

 

Germany

PMI Composite (November)

 

UK

CIPS/PMI Services Index (November)

Dec-05

Eurozone

GDP (Q3 f)

 

 

Retail Sales (October)

 

Germany

Manufacturers' Orders (October)

Dec-06

France

Merchandise Trade (October)

 

Germany

Industrial Production (October)

 

Italy

Retail Sales (October)

 

UK

Halifax HPI (November)

Asia Pacific

 

 

Dec-02

China

PMI Manufacturing Index (November)

 

India

PMI Manufacturing Index (November)

 

Japan

PMI Manufacturing Index (November)

Dec-04

Austraia

GDP (Q3)

 

China

General Services PMI (November)

 

Japan

PMI Composite (November)

 

Singapore

PMI (November)

Dec-05

Austraia

Merchandise Trade (October)

 

 

Retail Sales (October)

Dec-06

Japan

Household Spending (October)

Americas

 

 

Dec-02

US

Construction Spending (October)

 

 

ISM Manufacturing Index (November)

 

 

PMI Manufacturing Index (November)

Dec-03

US

Motor Vehicle Sales (November)

Dec-04

US

ADP Employment (November)

 

 

ISM Non-Manufacturing Index (November

Dec-05

Canada

Ivey Purchasing Managers' Index (November)

 

 

Merchandise Trade (October)

 

US

Factory Orders (October)

 

 

International Trade (October)

 

 

Jobless Claims (Week of Nov. 30)

Dec-06

Canada

Labor Force Survey (November)

 

US

Consumer Sentiment (December p)

 

  Employment Situation (November)

Global stock markets

 

Index

29 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

28051.41

-112.59

-0.4

 

NASDAQ

8665.47

-39.71

-0.5

 

S&P 500

3140.98

-12.65

-0.4

Canada

S&P/TSX Comp

17040.2

-74.32

-0.4

Europe

 

 

 

 

UK

FTSE 100

7346.53

-69.90

-1.0

France

CAC

5905.17

-7.55

-0.1

Germany

XETRA DAX

13236.38

-9.20

-0.1

Italy

MIB

23259.33

-83.09

-0.4

Spain

Ibex 35

9352

-7.00

-0.1

Sweden

OMX Stockholm 30

1730.25

-5.05

-0.3

Switzerland

SMI

10493.24

-35.90

-0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6947.98

-17.64

-0.3

Japan

Nikkei 225

23293.91

-115.23

-0.5

 

Topix

1699.36

-8.70

-0.5

Hong Kong

Hang Seng

26346.49

-547.24

-2.1

S. Korea

Kospi

2087.96

-30.64

-1.5

Singapore

STI

3193.92

-6.69

-0.2

China

Shanghai Comp

2871.98

-17.71

-0.6

Taiwan

TAIEX

11489.57

-127.51

-1.1

India

Sensex 30

40793.81

-336.36

-0.8

*Markets closed

 

 

 

 

Note: all releases are listed in local time.

Important Information

Econoday Inc. is a US company that provides financial commentary and indicators to industry professionals. All information provided and views expressed are those of Econoday. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested.