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On 1 November 2019 - US rallies on economic data, trade hopes; Europe up; Asia mixed

Anne D Picker

Anne D Picker - Econoday

Buyers step in after better US jobs, Chinese manufacturing data.

US markets

US equities advanced Friday on stronger-than-expected US jobs and Chinese manufacturing data, and positive comments from US officials on prospects for a US-China trade pact.  The Dow industrials rose 1.1 percent, the S&P 500 advanced 1.0 percent, and the NASDAQ was up 1.1 percent.

Risk appetite improved on the upbeat data, and on White House economic adviser Larry Kudlow’s comment that the US and China were making progress on their dispute over intellectual property, and on Commerce Secretary Wilbur Ross’s remark that a phase one trade deal was likely to be signed in early November.

Among sectors, industrials, materials, banks, technology, and health care outperformed. Rising oil prices gave energy stocks a boost. Underperformers included consumer staples and consumer discretionary stocks.

Among companies reporting, Dow member Exxon Mobil jumped 3 percent after an earnings and revenues beat. Chevron, another Dow stock, rose 0.04 percent on mixed earnings results, in light of a big tax charge. BeiGene, a biotech, rocketed 37 percent after announcing a joint venture with Amgen, which rose 2.2 percent. Fitbit, the exercise tech company, advanced 15.2 percent after saying it would be acquired by Google, which rose 1.1 percent.

In US economic news, GM strike or not, October's employment report came in solid. Nonfarm payrolls rose 128,000, which is on the high side of expectations with strength underscored by upward revisions to the two prior months totaling a net 95,000. Manufacturing, reflecting the effects of the now settled GM strike, fell 36,000 in a decline that looks to reverse in the November employment report. Other indications of strength come from the unemployment rate, up 1 tenth but at a low 3.6 percent, which is just off September's 50-year low, and the participation rate, which keeps climbing, up another tenth to 63.3 percent. In a separate report, the ISM manufacturing report was on the low side of expectations at 48.3 for October; the index missed Econoday's consensus by 1 point but gained a 1/2 point from September. New orders improved nearly 2 points in October but, at 49.1, are still under breakeven 50.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose US$1.41 to US$61.64, while gold rose by 90 cents to US$1514.90. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield rose 2 basis points to 2.20 percent while the 10-year note yield rose 4 basis points to 1.72 percent.

European markets

Most major European equities indexes rose Friday on upbeat Chinese and US economic data, plus positive US-China trade headlines. The Europe-wide STOXX 600 rose 0.7 percent, the German DAX rose 0.7 percent, the French CAC gained 0.6 percent and the UK FTSE-100 gained 0.7 percent.

Markets reacted favorably to a positive surprise on Chinese manufacturing PMI data, and US jobs data above expectations. More comments from US officials pointing to a US-China trade pact added to better market sentiment.

Among sectors, cyclicals outperformed defensive sectors, with miners, autos and construction leading, while telecom, utilities and media underperformed.

Among companies in focus, DSV Panalpina, a Danish transport service, jumped 7.4 percent on an earnings beat. Novo Nordisk, a Danish pharma, rose 3.6 percent after improving its sales guidance due to rising sales of new drugs. Autos have been strong, with Fiat Chrysler (up 0.6 percent) and Peugeot (up 0.6 percent) as the market digested details of their planned merger. Banks continued to suffer, with Danish Danske Bank off 4 percent after cutting its guidance.

In economic news, UK manufacturing outperformed market expectations in October. At 49.6, the sector PMI was up 1.3 points versus its September print, its second successive increase and now close enough to the 50-expansion threshold to suggest overall stagnation in business activity.

Asia Pacific markets

Major Asian markets posted mixed results Friday, with their performance on the week also varying widely. Regional data published Friday showed some improvement in Chinese manufacturing but weaker activity in the Japanese economy. The Shanghai Composite index was the strongest regional performer on the day, up 1.0 percent, but closed the week up just 0.1 percent. Japan’s Nikkei and Topix indices closed down 0.3 percent and flat on the day respectively and advanced 0.2 percent and 1.1 percent respectively. Hong Kong’s Hang Seng index rose 0.7 percent on the day, extending its weekly gain to 1.6 percent, while Australia’s All Ordinaries index closed up 0.1 percent on the day but finished the week down 0.9 percent.

The Markit Manufacturing PMI headline index for China advanced from 51.4 in September to 51.7 in October, above the consensus forecast of 50.1. This is the fourth consecutive increase in the headline index and takes it to its highest level since February 2017. The increase in the headline index in October reflects respondents' reports that output and new orders both strengthened, with the latter reported to have grown at the fastest pace since January 2013. New export orders were also reported to have risen for the first time in five months and at the fastest pace since February 2018, suggesting that progress in US-China trade talks in recent weeks has provided a boost to external demand.

The Markit Manufacturing PMI headline index for Japan fell to 48.4 in October, just below the flash estimate and consensus estimate of 48.5 and confirming a decline from 48.9 in September. This index has now indicated contraction in the sector for six consecutive months and is at its lowest level since June 2016. Although respondents cited production disruptions caused by severe typhoons in October and the impact of an increase in consumption tax rates at the start of the month as factors contributing to this weakness, they also reported that underlying demand conditions remain subdued. Also published today, labor market data showed Japan’s unemployment rate rose from 2.2 percent in August to 2.4 percent in September, with year-on-year growth in payrolls moderating from 1.0 percent to 0.8 percent.

The Markit Manufacturing PMI headline index for India fell from 51.4 in September to 50.6 in October, its lowest level in two years. Respondents reported weaker growth in output, new orders, and employment, slightly stronger growth in new export orders, and a drop in confidence about the twelve-month outlook. Also published today, Australian data showed producer price inflation moderated from 2.0 percent in the three months to June to 1.6 percent in the three months to September.

Looking forward

Central Bank activities

Nov-05

Australia

RBA Policy Announcement

Nov-06

Japan

BOJ MPB Minutes

Nov-07

UK

BOE Policy Announcement/Minutes

 

UK

BOE Inflation Report

Nov-08

Australia

RBA Statement on Monetary Policy

The following indicators will be released this week...

Europe

Nov-04

Germany

PMI Manufacturing Index (October)

 

Switzerland

SECO Consumer Climate (October)

 

UK

PMI Construction (October)

Nov-05

Eurozone

PPI (September)

 

France

PMI Composite (October)

 

UK

CIPS/PMI Services Index (October)

Nov-06

Eurozone

PMI Composite (October)

 

 

Retail Sales (September)

 

Germany

Manufacturers' Orders (September)

 

 

PMI Composite (October)

Nov-07

Germany

Industrial Production (September)

 

Italy

Retail Sales (September)

 

UK

Halifax HPI (October)

Nov-08

France

Industrial Production (September)

 

 

Merchandise Trade (September)

 

Germany

Merchandise Trade (September)

Asia Pacific

Nov-04

Australia

Retail Sales (September)

Nov-05

China

General Services PMI (October)

 

Hong Kong

PMI (October)

 

Singapore

PMI(October)

Nov-06

Japan

PMIComposite (October)

 

New Zealand

LaborMarket Conditions (Q3)

Nov-07

Australia

MerchandiseTrade (September)

Nov-08

China

MerchandiseTrade (October)

 

Japan

HouseholdSpending (September)

Americas

Nov-04

US

FactoryOrders (September)

Nov-05

Canada

MerchandiseTrade (September)

 

US

InternationalTrade (September)

 

 

ISMNonmanufacturing Index (October)

 

 

JOLTS(September)

Nov-06

Canada

IveyPurchasing Managers' Index (October)

 

US

Productivity& Costs (Q3 p)

Nov-07

US

JoblessClaims (Week of Nov 2)

Nov-08

Canada

HousingStarts (October)

 

 

Labor ForceSurvey (October)

 

US

ConsumerSentiment (Nov p)

Global stock markets

 

Index

1 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27347.36

301.13

1.1

 

NASDAQ

8386.4

94.04

1.1

 

S&P 500

3066.91

29.35

1.0

Canada

S&P/TSX Comp

16594.07

110.91

0.7

Europe

 

 

 

 

UK

FTSE 100

7302.42

54.04

0.7

France

CAC

5761.89

32.03

0.6

Germany

XETRA DAX

12961.05

94.26

0.7

Italy

MIB

22934.32

240.55

1.0

Spain

Ibex 35

9328

70.50

0.8

Sweden

OMX Stockholm 30

1737.51

3.83

0.2

Switzerland

SMI

10252.24

32.42

0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6779.15

6.27

0.1

Japan

Nikkei 225

22850.77

-76.27

-0.3

 

Topix

1666.5

-0.51

0.0

Hong Kong

Hang Seng

27100.76

194.04

0.7

S. Korea

Kospi

2100.2

16.72

0.8

Singapore

STI

3229.43

-0.45

0.0

China

Shanghai Comp

2958.2

29.14

1.0

Taiwan

TAIEX

11399.53

40.82

0.4

India

Sensex 30

40165.03

35.98

0.1

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.