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On 18 December 2019 - US flat; Europe soft on Brexit worry; Asia mixed

Anne D Picker

Anne D Picker - Econoday

UK Prime Minister Johnson’s stance renews concern over disorderly Brexit.

US markets

US equities traded sideways Wednesday in quiet markets, with renewed Brexit worries casting a pall over sentiment, and corporate earnings in focus. The Dow industrials eased 0.1 percent, the S&P 500 was off 0.04 percent, and the NASDAQ rose 0.1 percent.

Among sectors, real estate, communications services, and energy were the day's leaders, with materials, industrials, and consumer staples lagging. Among companies in focus, Fedex fell 10 percent after an earnings and revenues miss. The delivery company blamed the global trade war, and calendar effects, including a late Thanksgiving and a shortened holiday delivery season. On the positive side, General Mills rose 2 percent on a positive earnings surprise, led by strong sales in its pet foods unit.

In US economic news, comments from Fed officials pointed to a pause in monetary policy, and a benign economic outlook, with moderate growth and muted inflation. Chicago Fed President Charles Evans said inflation would need to get above 2 percent on a sustained basis before the Fed would even consider raising rates, and it is showing no sign of doing so.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 39 cents to US$66.17, while gold was flat at US$1,479.70. The US dollar rose against major currencies. The US Treasury 30-year bond yield rose 5 basis points to 2.36 percent while the 10-year note yield rose 4 basis points to 1.92 percent.

European markets

Major European equities declined Wednesday on renewed worries about the prospect of a hard Brexit. The Europe-wide STOXX 600 eased 0.1 percent, the German DAX fell 0.5 percent, the French CAC slipped 0.2 percent, but the UK FTSE-100 rose 0.2 percent, as sterling’s weakness cushioned the impact on the export-oriented UK index.

Prime Minister Boris Johnson’s plan to execute Brexit by end of 2020, with no extension possible to sort out details, obliged markets to start pricing in a no-deal Brexit again. Johnson’s comments raised talk he plans a minimal exit deal, if any. Defensive stocks outperformed on the news, which limited the overall declines. Food & beverages, media, and real estate led the gainers, while autos lagged, along with industrials, and telecom.

In economic news, German business sentiment improved in December for the third time in the last four months according to the latest Ifo survey. At 96.3, the latest reading was up 1.2 points versus a marginally firmer revised November reading and at its highest level since June. It was also on the strong side of the market consensus.

Asia Pacific markets

Major Asian markets posted mixed but generally moderate moves Wednesday. A light regional data calendar kept investors’ focus on external developments, including the potential impeachment of President Trump and the prospect of a no-deal Brexit. Japan’s Nikkei and Topix indices fell 0.6 percent and 0.5 percent respectively after trade data showed further weakness in exports, while the Shanghai Composite index fell 0.2 percent. Hong Kong’s Hang Seng index and Australia’s All Ordinaries index closed up 0.2 percent and 0.1 percent respectively.

Japan's merchandise trade balance swung from a revised surplus of  ¥15.7 billion in October to a deficit of  ¥82.1 billion in November, smaller than the consensus forecast for a deficit of  ¥380 billion. Exports fell 7.9 percent on the year in November after dropping 9.2 percent in September, more than the consensus forecast for a drop of 7.1 percent, with demand still weak from major trading partners, including the US, China and the European Union. Imports fell 15.7 percent on the year after dropping 14.8 percent previously, also a sharper decline than the consensus forecast for a 13.6 percent fall and largely driven by a bigger fall in both the volume and value of petroleum imports.

Looking forward

On Thursday in Asia/Pacific, New Zealand GDP, New Zealand merchandise trade, and Australian labor force survey figures are due as is a statement from the Bank of Japan. In Europe, reports on Swiss merchandise trade, the French business climate indicator, UK retail sales, UK distributive trades, and the BOE monetary policy decision are scheduled. In North America, US jobless claims, the Philadelphia Fed business outlook survey, and US existing home sales reports are scheduled.

Global stock markets

 

Index

18 Dec 2019

Daily Change

% Change Daily

North America

United States

Dow

28239.28

-27.88

-0.1

 

NASDAQ

8827.73

4.37

0.1

 

S&P 500

3191.14

-1.38

0.0

Canada

S&P/TSX Comp

17031.98

-43.22

-0.3

Europe

UK

FTSE 100

7540.75

15.47

0.2

France

CAC

5959.6

-8.66

-0.2

Germany

XETRA DAX

13222.16

-65.67

-0.5

Italy

MIB

23628.87

-1.90

0.0

Spain

Ibex 35

9621.8

5.90

0.1

Sweden

OMX Stockholm 30

1787.96

-3.97

-0.2

Switzerland

SMI

10556.74

17.85

0.2

Asia/Pacific

Australia

All Ordinaries

6957

6.50

0.1

Japan

Nikkei 225

23934.43

-131.69

-0.6

 

Topix

1738.4

-8.80

-0.5

Hong Kong

Hang Seng

27884.21

40.50

0.2

S. Korea

Kospi

2194.76

-0.92

0.0

Singapore

STI

3209.54

8.74

0.3

China

Shanghai Comp

3017.04

-5.38

-0.2

Taiwan

TAIEX

12122.45

25.44

0.2

India

Sensex 30

41558.57

206.40

0.5

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.