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On 17 December 2019 - US flat to higher on data, Fed hopes; Europe softer on Brexit worry; Asia gains

Anne D Picker

Anne D Picker - Econoday

USTR Lighthizer talks up US-China trade deal.

US markets

US equities edged up marginally Tuesday with help from economic data bolstering expectations for steady growth, and a more benign US-China trade picture. The Dow industrials rose 0.1 percent, the S&P 500 was up a fractional 0.03 percent, and the NASDAQ was up 0.1 percent.

Markets focused on relatively upbeat US economic data pointing to a resilient economy, and on comments from two Fed official renewing a pledge to keep rates steady at low levels. Dallas Fed President Robert Kaplan said Fed officials see rates on hold and growth likely to remain moderate, with muted inflation, while Boston Fed President Eric Rosengren made similar remarks. Meanwhile, US Trade Representative Robert Lighthizer said the US-China trade pact is enforceable, and that Chinese imports of US farm goods would double.

Among sectors: financials, energy, and consumer discretionary were the day’s leaders, with consumer staples and real estate shares lagging. Among companies in focus, Pfizer, the big pharma, eased 0.6 percent despite news the Food and Drug Administration approved its new prostate cancer drug. Boeing was off 0.03 percent after suspending production of its 737 Max jets. Shares of Roku, the streaming media company, fell 2.2 percent after news its chief financial officer would resign.

In US economic news, housing starts were strong again, up a monthly 3.2 percent at a 1.365 million annual rate in November, easily beating Econoday's consensus while permits, up 1.4 percent at 1.482 million, far exceeded Econoday's range of estimates. Industrial production bounced back to hit the top end of Econoday's consensus range with a 1.1 percent gain in November. The gain reflected the ending of the GM strike which in the two prior months made for steep declines of 0.9 percent and 0.4 percent.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 77 cents to US$66.14, while gold fell $1.00 to US$1,479.70. The US dollar rose against most major currencies. The US Treasury 30-year bond yield rose 2 basis points to 2.31 percent while the 10-year note yield was unchanged at 1.88 percent.

European markets

Major European equities indexes mostly weakened Tuesday as worries returned about a disorderly Brexit, and on a warning from Unilever, the consumer goods conglomerate. The Europe-wide STOXX 600 declined 0.7 percent, the German DAX fell 0.9 percent, the French CAC declined 0.4 percent, but the UK FTSE-100 rose 0.1 percent, with support from a weaker pound.

Worries about Brexit returned as Prime Minister Boris Johnson said he would oppose any transition period for Britain’s departure from the EU, even though many details have not been worked out. Johnson has vowed to proceed without an exit agreement, a more likely prospect with no further delay. Utilities, autos, and construction & materials outperformed while basic resources, chemicals, real estate, personal & household goods, and travel & leisure lagged. In corporate news, Unilever dropped 7.2 percent after lowering its sales outlook for 2019 and blaming conditions in South Asia and West Africa. Airbus, the European competitor to Boeing of the US, rose 2.4 percent after Boeing said it would suspend production of its 737 Max airplane.

In economic news, UK labor data provided mixed signals about developments in October and November as well as additional evidence that inflation pressures are easing. Claimant count joblessness climbed a further and sharper than expected 28,800, albeit following a 26,400 increase in October. This put the unemployment rate at 3.5 percent, a tick higher than in October.

Asia Pacific markets

Most major Asian markets closed higher Tuesday, with regional investor sentiment supported by gains on Wall Street Monday. The Shanghai Composite index and Hong Kong’s Hang Seng index were among the stronger performers in the region, upon 1.3 percent and 1.2 percent respectively, while Japan’s Nikkei and Topix indices closed up 0.5 percent and 0.6 percent respectively. After strong gains Monday, Australia’s All Ordinaries index closed unchanged Tuesday.

The Reserve Bank of Australia published the minutes of its December 3 meeting. Officials at that meeting left their main policy rate unchanged at a record low of 0.75 percent. This followed cuts of 25 basis point rates at the RBA's meetings in May, June and October. The minutes show that officials see little prospect of a quick increase in inflation, indicating that they remain open to further policy easing in the new year.

Singapore's non-oil domestic exports fell 5.9 percent on the year in November after falling 12.5 percent in October. These exports have now fallen on the year for eight months in a row, broadly in line with other regional data showing weakness in trade flows. The smaller year-on-year drop in headline exports growth was largely driven by improved demand from the United States and some Asian trading partners, offset by ongoing weakness in exports to China, Japan and the European Union.

Looking forward

On Wednesday in Asia/Pacific, the Bank of Japan monetary policy announcement and Japanese merchandise trade figures are due. In Europe, the German PPI, German Ifo, UK CPI, UK PPI, and Eurozone HICP reports are scheduled. In North America, Canadian CPI and US Petroleum Status reports are scheduled.

Global stock markets

 

Index

17 Dec 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

28267.16

31.27

0.1

 

NASDAQ

8823.36

9.13

0.1

 

S&P 500

3192.52

1.07

0.0

Canada

S&P/TSX Comp

17074.69

18.33

0.1

Europe

 

 

 

 

UK

FTSE 100

7525.28

6.23

0.1

France

CAC

5968.26

-23.40

-0.4

Germany

XETRA DAX

13287.83

-119.83

-0.9

Italy

MIB

23630.77

106.01

0.5

Spain

Ibex 35

9615.9

-64.70

-0.7

Sweden

OMX Stockholm 30

1791.93

4.27

0.2

Switzerland

SMI

10538.89

-2.78

0.0

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6950.5

-1.81

0.0

Japan

Nikkei 225

24066.12

113.77

0.5

 

Topix

1747.2

10.33

0.6

Hong Kong

Hang Seng

27843.71

335.62

1.2

S. Korea

Kospi

2195.68

27.53

1.3

Singapore

STI

3200.8

-5.29

-0.2

China

Shanghai Comp

3022.42

38.03

1.3

Taiwan

TAIEX

12097.01

157.24

1.3

India

Sensex 30

41352.17

413.45

1.0

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.