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On 22 November 2019 - Global shares: US, Europe, Asia up on US-China trade hopes

Anne D Picker

Anne D Picker - Econoday

President Trump says a deal may be close.

US markets

US equities rose Friday after President Trump told Fox News a trade deal with China is “potentially very close.” The Dow industrial average rose 0.4 percent, the S&P 500 rose 0.2 percent, and the NASDAQ was also up 0.2 percent.

Among sectors, financials outperformed, led by money center banks. Consumer discretionary stocks gained on mostly upbeat retail store results. Technology shares lagged on weakness in software, while real estate fared the worst.

Among a batch of retailers reporting quarterly results, Gap rose 4.4 percent on an earnings beat, despite declining revenues and same-store sales. Nordstrom shares rallied 10.5 percent on a big earnings beat, and after raising its EPS guidance. On the negative side, Williams Sonoma fell 1.9 percent despite mostly in-line results. Foot Locker, the sporting goods store, declined 2.9 percent on a downgrade to its fourth-quarter guidance. In the tech space, Intuit, the financial software leader, beat earnings expectations, but dropped 4.2 percent on disappointing guidance.

In US economic news, November’s flash PMI data showed modest strength, led by a six-tenth gain for manufacturing to a better-than-expected 52.2. Services also rose, up 5 tenths to 51.6, which was also better than expected. In a separate report, consumer sentiment continued to recover from its tariff-related scare in August, at 96.8 in final November for the best score since July. Expectations were up more than 3 points to 87.3 in a gain that likely reflects confidence in future income. Not contributing to November, however, are current conditions, down 1.6 points to 111.6.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil slipped 18 cents to US$63.60, while gold rose by US$5.10 to US$1469.70. The US dollar rose against most major currencies. US Treasury 30-year bond yield declined 1 basis point to 2.22 percent, and the US 10-year note yield remained unchanged at 1.77 percent.

European markets

Major European equities indexes popped up Friday on better noises on the US-China trade front, and some better Eurozone economic data. The Europe-wide STOXX 600 rose 0.4 percent, the German DAX firmed 0.2 percent, the French CAC was up 0.2 percent, and the UK FTSE-100 gained 1.2 percent. The heavily export-oriented UK index benefited from a decline in sterling on negative UK flash PMI data released for the first time Friday. The flash composite index fell to 48.5 from 50.0 in October, signaling a 0.2 percent UK GDP drop in the fourth quarter, IHS Markit said.

Markets reacted favorably to President Trump’s comment that a trade deal is close, with trade-sensitive shares, especially miners, outperforming. Travel & leisure, banks, and media outperformed. On the downside, real estate, chemicals, and utilities underperformed.

In other economic news, the Eurozone flash manufacturing PMI (46.6) chalked up a useful improvement versus its final October print (45.9) although it remained comfortably in recession territory. At 50.3, the Eurozone flash composite output index was short of October's already soft final 50.6, below market expectations and close enough to the 50-expansion threshold to signal stagnation in private sector business activity. The composite decline was due to services where the flash sector PMI weighed in at 51.5, down from October's final 52.2 and a 10-month low. For Germany, the flash composite output index was 49.2, up on October's final 48.9 but this was also still one of the weakest readings seen in the last six-and-half years. At 43.8, the flash sector PMI suggests that manufacturing remains in the doldrums albeit not quite to the extent that it was in October (final PMI 42.1). More worryingly, growth of services activity slowed again with a flash PMI of just 51.3, down 0.3 points versus October's final 51.6 mark

Asia Pacific markets

Most major Asian markets closed Friday up on the day but down on the week, with uncertainty on year-term prospects for US-China trade talks still the main focus for regional investors. Japan’s Nikkei and Topix indices posted modest gains on the day of 0.3 percent and 0.1 percent respectively, closing the week down 0.8 percent and 0.3 percent respectively. Despite ongoing civil unrest, Hong Kong’s Hang Seng index advanced 0.5 percent on the day and was the strongest regional performer on the week, up 0.8 percent, while Australia’s All Ordinaries index rose 0.6 percent on the day but fell 1.2 percent on the week. The Shanghai Composite index underperformed on the day, down 0.6 percent, to finish the week down 0.2 percent.

Japanese inflation data released Friday showed steady headline inflation but slightly stronger underlying measures of inflation in October. The headline consumer price index rose 0.2 percent on the year in October, as it did in September, falling short of the consensus forecast of 0.4 percent, with stronger increases in food prices and housing costs offset by weaker utilities prices. Core CPI, which excludes fresh food prices, increased 0.4 percent on the year in October, up from 0.3 percent in September, while the Bank of Japan's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, advanced 0.7 percent on the year, up from 0.5 percent previously. The increase in underlying inflation in October may indicate to officials that there remains some momentum towards the BoJ’s 2.0 percent inflation target. BoJ officials have in recent months advised that monetary policy will be eased further "without hesitation" if they consider that the "momentum" towards meeting their inflation target is “lost”.

Flash PMI survey estimates indicate conditions in the Japanese services sector have improved so far in November but remain weak in the manufacturing sector. The flash estimate for the Japan manufacturing PMI headline index for November is 48.6, up slightly from the final estimate of 48.4 for October, with survey respondents reporting another month of falling output, new orders, and new export orders. The flash estimate for the Japan services business activity index for November is 50.4, up from the final estimate of 49.7 for October, with the survey indicating stronger growth in output and new orders. The flash estimate for the composite output index was 49.9 in November, up from the final estimate of 49.1 for October.

Looking forward

Central Bank activities

Nov-27

US

Fed Beige Book

The following indicators will be released this week...

Europe

 

 

Nov-25

Germany

Ifo Survey (November)

Nov-26

Switzerland

Employment (Q3)

Nov-27

Italy

Business and Consumer Confidence (November)

Nov-28

Eurozone

EC Economic Sentiment (November)

 

 

M3 Money Supply (October)

 

Germany

CPI (November p)

 

Italy

PPI (October)

 

Switzerland

GDP (Q3)

Nov-29

Eurozone

HICP (October)

 

 

Unemployment Rate (October)

 

Germany

Unemployment Rate (November)

 

Italy

CPI (November p)

 

 

GDP (Q3)

 

Switzerland

KOF Swiss Leading Indicator (November)

 

UK

M4 Money Supply (October)

Asia Pacific

 

 

Nov-25

Singpore

CPI October)

Nov-26

Hong Kong

Merchandise Trade (October)

 

New Zealand

Retail Trade (Q3)

 

Singpore

Industrial Production (October)

Nov-27

New Zealand

Merchandise Trade (October)

Nov-29

India

GDP (Q3)

 

Japan

Industrial Production (October)

 

 

Retail Sales (October)

 

 

Unemployment Rate (November)

Nov-30

China

CFLP Manufacturing PMI (November)

Americas

 

 

Nov-26

US

Consumer Confidence (November)

 

 

International Trade in Goods (October)

 

 

New Home Sales (October)

 

 

S&P Corelogic Case-Shiller HPI (September)

Nov-27

US

Durable Goods Orders (October)

 

 

GDP (Q3 p)

 

 

Jobless Claims (Nov-23w)

 

 

Pending Home Sales (October)

 

 

Personal Income and Outlays (October)

Nov-29

Canada

GDP (Q3)

 

 

Monthly GDP (September)

 

US

Chicago PMI (November)

Global stock markets

 

Index

22 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

27875.62

109.33

0.4

 

NASDAQ

8519.89

13.68

0.2

 

S&P 500

3110.29

6.75

0.2

Canada

S&P/TSX Comp

16954.84

-44.35

-0.3

Europe

 

 

 

 

UK

FTSE 100

7326.81

88.26

1.2

France

CAC

5893.13

11.92

0.2

Germany

XETRA DAX

13163.88

26.18

0.2

Italy

MIB

23259.8

-19.98

-0.1

Spain

Ibex 35

9254.7

40.70

0.4

Sweden

OMX Stockholm 30

1724.19

4.08

0.2

Switzerland

SMI

10369.44

31.09

0.3

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6816.5

38.84

0.6

Japan

Nikkei 225

23112.88

74.30

0.3

 

Topix

1691.34

1.96

0.1

Hong Kong

Hang Seng

26595.08

128.20

0.5

S. Korea

Kospi

2101.96

5.36

0.3

Singapore

STI

3225.65

33.44

1.0

China

Shanghai Comp

2885.29

-18.35

-0.6

Taiwan

TAIEX

11566.8

8.53

0.1

India

Sensex 30

40359.41

-215.76

-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.