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On 8 November 2019 - US steady to firm, Europe off on US-China trade uncertainty; Asia mixed

Anne D Picker

Anne D Picker - Econoday

Markets scale back trade deal hopes after Trump comments.

US markets

US equities ended slightly higher Friday amid uncertainty over prospects for a US-China trade deal after President Trump pushed back against rising expectations for tariff cuts as part of a near-term deal. The Dow industrials gained 0.02 percent, the S&P 500 rose 0.3 percent, and the NASDAQ gained 0.5 percent.

Risk assets have rallied in recent days on a series of reports suggesting China and the US were moving closer to an interim trade pact, and the two sides would even roll back existing tariffs. But President Trump’s hawkish trade adviser, Peter Navarro, said Trump had not agreed to cut tariffs, and Trump echoed Navarro. Equities were under pressure through much of the day but managed to close slightly higher.

Among companies in the news, Walt Disney, the entertainment company, rose 3.8 percent after an earnings beat, and showing strong momentum after recent acquisitions. On the downside, Gap Inc., the clothing company, dropped 7.6 percent after cutting its guidance and announcing its CEO would step down.

In US economic news, US consumer sentiment was reported steady and favorable, at 95.7 for the preliminary November reading and very near October's 95.5 and the monthly average since November last year of 95.9. Inflation expectations remain low, unchanged at 2.5 percent for the year-ahead outlook, though up 1 tenth to 2.4 percent for the 5-year outlook.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 53 cents to US$62.62, while gold fell by US$9.40 to US$1460.30. The US dollar was up against most major currencies, but marginally lower vs. the yen. The US Treasury 30-year bond yield rose 2 basis points to 2.42 percent while the 10-year note yield rose 3 basis points to 1.94 percent.

European markets

Most major European equities indexes declined Friday after President Trump said he has not agreed to roll back tariffs, which forced markets to reassess prospects for a US-China trade pact. The Europe-wide STOXX 600 slipped 0.3 percent, the German DAX fell 0.5 percent, the French CAC was off 0.02 percent and the UK FTSE-100 fell 0.6 percent.

Utilities and health care, defensive sectors, were the only segments to show gains, with banks, food & beverages, retail, basic resources, and oil & gas among the worst performers. Disappointing quarterly results pushed French banks Natixis and Credit Agricole down 7.3 percent and 2.3 percent, respectively, while German financial services firm Allianz fell 2.4 percent.

In economic news, French industrial production (ex-construction) staged a partial rebound in September. Following an unrevised 0.9 percent monthly drop in August, output rose a slightly smaller than expected 0.3 percent, lifting annual growth from minus 1.3 percent to 0.1 percent, its first positive reading since May.

Asia Pacific markets

Major Asian markets closed down or only slightly higher Friday, with Japanese markets outperforming on both the day and on the week. The Nikkei and Topix indices both increased 0.3 percent on the day and advanced 2.0 percent and 2.1 percent respectively on the week. Hong Kong’s Hang Seng index recorded the biggest fall on the day, down 0.8 percent, but still advanced 1.9 percent on the week, while Australia’s All Ordinaries index fell 0.1 percent on the day and finished the week up 0.8 percent. The Shanghai Composite index fell 0.5 percent on the day and underperformed with a decline of 0l9 percent on the week.

Chinese trade data were the main focus of the regional data calendar Friday. China’s trade surplus in US dollar terms widened from US$39.65 billion in September to US$42.81 billion in October. Exports fell 0.9 percent on the year in October after falling 3.2 percent in September, mainly reflecting some improvement in demand from the United States and the European Union. Imports fell 6.4 percent on the year, after falling 8.5 percent previously. Chinese authorities set the reference rate for the yuan below 7.00 per US dollar for the first time since August.

The Reserve Bank of Australia published its quarterly Statement on Monetary Policy Friday after leaving policy rates on hold at 0.75 percent earlier in the week. Officials believe that the domestic economy is "gradually coming out of a soft patch" and forecast GDP growth to strengthen over the next two years. Although they have revised up their near-term inflation forecasts slightly, officials still expect inflation to stay below their target range of 2.0 percent 3.0 percent through to the end of 2021. This forecast reflects their assessment that there remains significant spare capacity in the Australian labor market, with officials arguing that is "increasingly clear" that lower unemployment is needed to generate wages growth that is consistent with sustainable achieving the inflation target. This suggests that the RBA's bias remains in favor of further policy easing in the months ahead, with today’s statement reiterating that officials are prepared to ease policy further if required. Also published today, home loans data showed further but weaker growth in lending activity in September, broadly in line with the RBA’s recent comments on the housing market. The yield on the Australian 10-year bond increased 8 basis points on the day.

Household spending in Japan, in real terms, increased 9.5 percent on the year in September, accelerating sharply from 1.0 percent in August. This increase was largely driven by spending brought forward ahead of an increase in consumption tax rates from 8.0 percent to 10 percent at the start of October. Retail sales data released last month also showed an acceleration in year-on-year growth in September.

Looking forward

Central Bank activities

Nov-13

New Zealand

RBNZ Policy Announcement

The following indicators will be released this week...

Europe

 

 

Nov-11

Italy

Industrial Production (September)

 

UK

GDP (Q3 p)

 

 

Industrial Production (September)

 

 

Monthly GDP (September)

Nov-12

Germany

ZEW Survey (November)

 

UK

Labor Market Report (October)

Nov-13

Eurozone

Industrial Production (September)

 

Germany

CPI (October final)

 

UK

CPI (October)

 

 

PPI (October)

Nov-14

Eurozone

GDP Flash (Q3)

 

France

CPI (October final)

 

Germany

GDP Flash (Q3)

 

UK

Retail Sales (October)

Nov-15

Eurozone

HICP (October)

 

Switzerland

Producer and Import Prices (October)

Asia Pacific

 

 

Nov-11

India

Industrial Production (September)

 

Japan

Machine Orders (September)

Nov-13

Australia

Wage Price Index (September)

 

India

CPI October)

 

Japan

PPI (October)

Nov-14

Australia

Labor Force Survey (October)

 

China

Fixed Asset Investment (October)

 

 

Industrial Production (October)

 

 

Retail Sales (October)

 

India

WPI (October)

 

Japan

GDP (Q3 a)

Nov-15

China

House Price Index (October)

 

Hong Kong

GDP (Q3 f)

 

Japan

Household Spending (September)

Americas

 

 

Nov-13

US

CPI (October)

Nov-14

US

Jobless Claims (Week of Nov 9)

 

 

PPI-FD (October)

Nov-15

US

Business Inventories (September)

 

 

Empire State Manufacturing Index (November)

 

 

Import & Export Prices (October)

 

 

Industrial Production (October)

 

 

Retail Sales (October)

Global stock markets

 

Index

8 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27681.24

6.44

0.0

 

NASDAQ

8475.31

40.79

0.5

 

S&P 500

3093.08

7.90

0.3

Canada

S&P/TSX Comp

16877.42

71.67

0.4

Europe

 

 

 

 

UK

FTSE 100

7359.38

-47.03

-0.6

France

CAC

5889.7

-1.29

0.0

Germany

XETRA DAX

13228.56

-60.90

-0.5

Italy

MIB

23534.49

31.46

0.1

Spain

Ibex 35

9393.7

-53.60

-0.6

Sweden

OMX Stockholm 30

1772.56

8.75

0.5

Switzerland

SMI

10309.23

-17.55

-0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6833.2

-3.71

-0.1

Japan

Nikkei 225

23391.87

61.55

0.3

 

Topix

1702.77

4.64

0.3

Hong Kong

Hang Seng

27651.14

-196.09

-0.7

S. Korea

Kospi

2137.23

-7.06

-0.3

Singapore

STI

3264.3

-21.42

-0.7

China

Shanghai Comp

2964.19

-14.52

-0.5

Taiwan

TAIEX

11579.54

-27.02

-0.2

India

Sensex 30

40323.61

-330.13

-0.8

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.