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On 25 November 2019 - Global shares: US, Europe, Asia up on better US-China trade news

Anne D Picker

Anne D Picker - Econoday

Markets lifted by LVMH and Novartis M&A deals.

US markets

US equities rose Monday as positive reports on US-China trade restored hopes for a near-term interim trade pact.  The Dow industrials and the S&P 500 each gained 0.7 percent and the NASDAQ gained 1.3 percent.

Markets were buoyed by a report in Global Times, a Chinese-government-backed newspaper, that a phase-one trade deal was close, and by separate reports that China would improve protection for intellectual property rights, a key US concern in trade talks. Reuters, on the other hand, reported it was unlikely the two sides would reach agreement on a phase-two trade deal.

US stocks were bolstered by purchases of US firms by European companies, with LVMH, the French luxury goods leader, proceeding with its purchase of Tiffany, the iconic jeweler, and Swiss pharma Novartis saying it would buy US-based The Medicines Company. Other luxury retailers tracked LVMH higher, and pharma shares followed Novartis higher.

Tech stocks outperformed on the trade news, with semiconductors leading the way.  Chipmaker Nvidia rose 4.9 percent, with an extra boost from an analyst upgrade. Industrials were winners, with transport stocks showing strength. Communication services lagged on soft telecom and media stocks. Energy suffered from weakness in crude oil prices. Consumer staples lagged in response to the move into riskier assets.

Among other companies in focus, Tesla, the electric automaker, rose 1.0 percent on news of strong orders for its new truck, and Ebay, the online retailer, rose 2.1 percent on news it would sell its Stubhub event ticket business. Schwab, the online broker, rose 2.3 percent after announcing terms for purchase of its online rival, TD Ameritrade, which rose 7.8 percent.

In US economic news, Texas manufacturing activity continued to contract but at a slower pace in November, with the general business activity index rising 3.8 points to minus 1.3, near the top of the range of forecasts. The production index indicated worsening conditions, however, dropping into contraction for the first time since 2016 with a monthly decline of 6.9 points to minus 2.4.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude oil rose 6 cents to US$63.66, while gold fell by US$7.90 to US$1461.80. The US dollar rose against most major currencies, except sterling.  The US Treasury 30-year bond yield was down 1 basis point to 2.21 percent while the 10-year note yield fell 1 basis point to 1.76 percent.

European markets

Most major European equities indexes rallied Monday on upbeat US-China trade headlines and positive reaction to M&A news. The Europe-wide STOXX 600 rose 1.0 percent, the German DAX gained 0.6 percent, the French CAC rose 0.5 percent and the UK FTSE-100 was up 0.9 percent. Risk assets were lifted by a report in a Chinese government-backed newspaper that a US-China trade deal is close, and other positive reports on trade prospects.  Companies with exposure to trade with China outperformed, including miners and tech firms.  Markets also reacted positively to news that French luxury goods conglomerate LVMH (up 2.0 percent) would acquire US luxury goods icon Tiffany (up 6.3 percent), and to news that Swiss pharma Novartis (up 0.9 percent) would buy US-based The Medicines Co. (up 22 percent).

In economic news, the German Ifo new business survey found little change in overall sentiment this month. At 95.0, the headline climate indicator was just 0.3 points stronger than its minimally upwardly revised October print and in line with the market consensus. It was also still amongst the weakest readings recorded over the last decade. In a separate report, the UK CBI November Distributive Trades Survey found retailers enjoying their best month since the headline sales index went negative back in May. Even so, while stronger than expected, at minus 3 percent the balance of respondents reporting an increase in volume sales versus a year ago was still negative.

Asia Pacific markets

Major Asian markets closed higher Monday, with a light regional data calendar keeping investor focus on US-China trade news and Hong Kong political developments. After President Trump indicated Friday that a trade deal is “potentially very close” Chinese officials announced over the weekend measures aimed at boosting protection of intellectual property rights. Local government elections held in Hong Kong over the weekend delivered a record turnout, no major disruptions, and an overwhelming victory to pro-democracy candidates. Hong Kong Chief Executive Carrie Lam announced that her government will “seriously reflect” on the outcome of the election, with Chinese state media expressing hope that the result will be an opportunity to “to return the city to normal”.

Hong Kong’s Hang Seng index outperformed Monday after the election result, up 1.5 percent, while the Shanghai Composite index also made a strong gain of 0.7 percent. Japan’s Nikkei and Topic indices advanced 0.8 percent and 0.7 percent. Australia’s All Ordinaries index underperformed, up 0.3 percent on the day, with major bank Westpac again selling off sharply in response to last week’s allegations of money laundering and terrorism financing breaches.

Singapore's headline consumer price index advanced 0.4 percent on the year in October, down from 0.5 percent in September, largely driven by a bigger fall in housing and utilities charges, partly offset by stronger growth in food prices and transport costs.  The Monetary Authority of Singapore's preferred measure of core inflation, which excludes the cost of accommodation and private road transport, increased 0.6 on the year in October, also moderating from 0.7 percent in September. Officials at the Monetary Authority of Singapore expect price pressures to remain subdued this year and next, in line with the decision at their semi-annual policy review held last month to target a slightly slower rate of appreciation for Singapore’s nominal effective exchange rate.

Looking forward

On Tuesday in Asia/Pacific, New Zealand retail trade, Singapore industrial production, and Hong Kong merchandise trade reports are scheduled. In Europe, German Gfk consumer climate and Swiss employment figures are due. In North America, releases are scheduled for the following: US international trade in goods, US S&P Corelogic Case-Shiller housing price index, US new home sales and US consumer confidence.

Global stock markets

 

Index

25 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

28066.47

190.85

0.7

 

NASDAQ

8632.49

112.60

1.3

 

S&P 500

3133.64

23.35

0.7

Canada

S&P/TSX Comp

17032.86

78.02

0.5

Europe

 

 

 

 

UK

FTSE 100

7396.29

69.48

0.9

France

CAC

5924.86

31.73

0.5

Germany

XETRA DAX

13246.45

82.57

0.6

Italy

MIB

23467.25

207.45

0.9

Spain

Ibex 35

9319.9

65.20

0.7

Sweden

OMX Stockholm 30

1742.04

17.85

1.0

Switzerland

SMI

10468.62

99.18

0.9

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6835.57

19.07

0.3

Japan

Nikkei 225

23292.81

179.93

0.8

 

Topix

1702.96

11.62

0.7

Hong Kong

Hang Seng

26993.04

397.96

1.5

S. Korea

Kospi

2123.5

21.54

1.0

Singapore

STI

3220.63

-5.02

-0.2

China

Shanghai Comp

2906.17

20.88

0.7

Taiwan

TAIEX

11561.58

-5.22

0.0

India

Sensex 30

40889.23

529.82

1.3

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.