On 08 January, 2019 - US stocks increase for third day as US-China trade talks continue

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Anne D Picker - Econoday

9 January 2019

The Bank of Canada is expected to leave interest rates unchanged.

US markets

US stocks recorded another day of solid gains Tuesday after officials announced US-China trade talks would extend to a third day and job openings data suggested labour market pressures may have eased. The Dow closed 1.1x percent higher, as did the Nasdaq, while the S&P advanced 1.0 percent.

US-China trade talks held in Beijing, originally scheduled to finish Tuesday, have now been extended to Wednesday. Officials have expressed satisfaction with the progress made but have provided few details. Significant progress on issues such as market access and intellectual property protection could result in the US cancelling the increase in tariffs on Chinese goods scheduled to take place from the start of March. The tariff rate on Chinese goods is set to increase from 10 percent to 25 percent.

US international trade data scheduled for release Tuesday were delayed due to the ongoing government shutdown, but the Labor Department’s report on job openings (JOLTS) was published. Openings fell from a revised 7.131 million in October to 6.888 million in November, but the gap between the number of openings and the number of unemployed persons actively looking for work remains very wide at 870,000. November’s report also showed that the number of people quitting their job fell but remained at relatively high levels. Overall, the report suggests that labour market conditions remain tight but that pressures may have eased, potentially supporting the case for more gradual policy tightening by the Fed.

Also released today, the NFIB survey of small businesses showed sentiment remained relatively high in December but down from November, with the survey’s optimism index falling for a fourth consecutive month from 104.8 to 104.4. Survey respondents reported less confidence about the near-term economic outlook, expansion prospects, investment plans, sales and earnings. The Redbook retail sector survey showed store sales grew 8.9 percent on the year in the January 5 week, down from 9.3 percent previously but still indicating strong conditions, while consumer credit data also pointed to solid growth in consumer spending.

These data reflect observations at 4:00 PM US ET. Gold was down US$3.50 to US$1286.40. Copper futures were up 0.49 percent to US$2.65. WTI spot crude was up US$1.20 to US$49.72. Dated Brent spot crude was up US$1.35 to US$58.68. The US dollar advanced against the euro, pound, Swiss franc and the Australian dollar. It was unchanged against the yen and retreated against the Canadian dollar. The yield on the US Treasury 30 year bond was up 1 basis point to 3.00 percent while the 10 year note was up 3 basis points to 2.72 percent.

European markets

Major European indices closed higher on Tuesday despite weak German industrial production data. The FTSE advanced 0.7 percent, the CAC outperformed with an increase of 1.2 percent, the DAX closed the day up 0.5 percent and the SMI added 1.1 percent.

German data published Tuesday showed industrial production growth weakened further in November, extending the recent poor performance and broadly in line with factory orders data published earlier in the week. Output fell 1.9 percent on the month, its second biggest decline since August 2014, after a steeper revised 0.8 percent drop in October, while year-on-year growth declined sharply from an increase of 0.5 percent to a decline of 4.6 percent. Weakness was broad-based across categories and sectors. Average growth in October and November is well below the average for the three months to September, suggesting that growth would need to be implausibly large in December just to keep output flat for the quarter.

French data showed a wider trade deficit of €5.10 billion in November, up from €4.06 billion in October. Both exports and imports fell on the month and it appears likely that net exports will make a smaller contribution to headline GDP growth in the three months to December. Swiss data showed no change in the seasonally-adjusted unemployment rate in December and a small year-on-year fall in retail sales volumes in November.

Asia Pacific Markets

Asia Pacific markets were mixed Tuesday. Japanese markets advanced, with the Nikkei up 0.8 percent and the Topix gaining 0.4 percent. Australia’s All Ordinaries Index and the Singapore STI also rose 0.7 percent. Hong Kong’s Hang Seng Index closed up slightly while stocks fell by 0.3 percent in China and Taiwan.

Korea’s Kospi index was the worst performer in the region, down 0.6 percent. Korean electronics manufacturer, Samsung, led this decline after the company announced fourth quarter operating profit will fall by 29 percent, well below analyst expectations. The company cited “lackluster demand’ and “intensifying competition”, echoing guidance made last week by Apple.

The regional data calendar was again light Tuesday, with Australian trade data the only indicator of note. Australia's trade surplus narrowed from a revised A$2.013 billion in October to A$1.952 billion in November. Growth in exports was steady, while growth in imports slowed.

Looking forward

US-China trade negotiations have been extended to Wednesday with significant attention to be paid to public statements released at the end of talks. The minutes to the December FOMC meeting will be published late in the day following scheduled public comments from Fed officials Raphael Bostic, Charles Evans, and Eric Rosengren, while the Bank of Canada is expected to leave policy rates on hold at its January meeting after raising rates last October. German trade, Swiss inflation and Eurozone unemployment data are also scheduled for release.

Global Stock Markets

 

Index

08 Jan 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

23787.45

256.10

1.1

 

NASDAQ

6897.00

73.53

1.1

 

S&P 500

2574.41

24.72

1.0

Canada

S&P/TSX Comp

14605.15

101.02

0.7

Europe

 

 

 

 

UK

FTSE 100

6861.60

50.72

0.7

France

CAC

4773.27

54.10

1.1

Germany

XETRA DAX

10803.98

56.17

0.5

Italy

MIB

19000.14

46.87

0.2

Spain

Ibex 35

8847.30

71.00

0.8

Sweden

OMX Stockholm 30

1457.47

17.54

1.2

Switzerland

SMI

8629.48

93.53

1.1

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

5783.29

38.82

0.7

Japan

Nikkei 225

20204.04

165.07

0.8

 

Topix

1518.43

5.90

0.4

Hong Kong

Hang Seng

25875.45

39.75

0.2

  1. Korea

Kospi

2025.27

-11.83

-0.6

Singapore

STI

3122.94

20.14

0.6

China

Shanghai Comp

2526.46

-6.63

-0.3

Taiwan

TAIEX

9563.60

-26.70

-0.3

India

Sensex 30

35980.93

130.77

0.4

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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