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On 26 November 2019 - Global shares: US firms on trade hopes; Europe flat to higher, Asia mixed

Anne D Picker

Anne D Picker - Econoday

Markets key on upbeat trade headlines again.

US markets

US equities edged up Tuesday on reports pointing to progress in US-China trade talks.  The Dow industrials, the S&P 500, and the NASDAQ all rose 0.2 percent.

Bloomberg reported China’s Ministry of Commerce said China and the US had reached agreement on key issues during a high-level phone call on Tuesday morning. Politico reported a White House official said a deal was close, and the official predicted China would make concessions on intellectual property protection.

Defensive stocks, including REITs, consumer staples, and materials, led the gainers, while financials and energy underperformed. Housing and construction stocks were among the winners, partly in response to surprisingly strong US home sales. Separately, Fed Governor Lael Brainard, said the housing sector was turning around in response to the Fed’s three recent rate cuts, which she said have improved financing conditions, along with the strong labor market.

Among other companies in focus, Best Buy, the retailer, rallied 9.9 percent after an earnings and revenues beat, and raising its guidance. Dick’s Sporting Goods, another retailer, surged 18.6 percent after a huge earnings beat and raising its guidance. On the downside, Dollar Tree, a retailer, fell 15.2 percent after an earnings miss and after citing tariffs for cutting its guidance. Hewlett Packard, the information technology company, dropped 8.5 percent after a revenue miss.

In US economic news, new home sales are showing rapid acceleration, with help from low mortgage rates and a strong labor market. Sales of new single-family homes came in at an annual rate of 733,000 in October, easily beating expectations. Moreover, September annual sales were revised sharply higher from 701,000 to 738,000, the highest level in twelve years. Year-on-year, October sales are up an impressively robust 31.6 percent. In a separate report, consumer confidence surprisingly deteriorated in November. Having dipped in October to (an upwardly revised) 126.1, the composite headline index shed a further 0.6 points to 125.5, the lowest reading since June. The latest decline was wholly attributable to present conditions where the sub-index dropped from 173.5 to 166.9. By contrast, expectations gained more than 3 points to 97.9.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude oil rose 58 cents to US$64.24, while gold rose by US$7.10 to US$1,468.90. The US dollar was down versus the Canadian and Australian dollar and up against the sterling, but little changed against most other major currencies.  The US Treasury 30-year bond yield was down 3 basis points to 2.18 percent while the 10-year note yield fell 2 basis points to 1.74 percent.

European markets

Most major European equities indexes were flat to marginally higher Tuesday on more positive news headlines on US-China trade talks. The Europe-wide STOXX 600 was up 0.1 percent, the German DAX declined 0.1 percent, the French CAC rose 0.1 percent and the UK FTSE-100 also rose 0.1 percent. 

Real estate, construction & materials, and financial services outperformed, while travel & leisure, oil & gas, and banks were the laggards. Vifor Pharma, a Swiss drug company, was the top performer, up 7 percent on positive drug trial news. Pets at Home, a UK pet food company, was a big winner, up 2.25 percent on strong profits guidance. On the downside, Compass Group, a UK caterer, dropped 7.9 percent after saying bad business conditions in Europe would hit its revenues and profits.

In economic news, the German GfK survey confirmed a drop in consumer sentiment in November but also expects a small improvement in the run-up to Christmas. At 9.6, the final headline climate indicator in November was down 0.2 points versus its October level but December is seen posting a 0.1 point gain to 9.7, similarly a tick higher than the market consensus albeit still one of the weakest readings in the last couple of years.

Asia Pacific markets

Asian markets posted mixed results Tuesday, but gains and losses were mostly modest, with the regional data calendar providing little direction to investor sentiment. Senior Chinese and US officials spoke by phone to discuss ongoing trade negotiations but it remains unclear when a phase one deal may be reached, with US additional tariffs on Chinese goods scheduled to take effect December 15.

Australia’s All Ordinaries index was the strongest performer in the region, closing up 0.8 percent, with major bank Westpac posting a strong gain after it announced its chief executive officer will resign and its chairman retire early in response to last week’s allegations of serious breaches of money laundering rules. Japan’s Nikkei and Topix indices advanced 0.3 percent and 0.2 percent on the day, while the Shanghai Composite index closed unchanged. Hong Kong’s Hang Seng index fell 0.3 percent, despite a strong first-day gain for newly-listed Chinese tech firm Alibaba on the Hong Kong exchange.

Speaking after the close of local trading, Reserve Bank of Australia Governor Philip Lowe discussed the potential for the RBA to implement unconventional monetary policies as part of its ongoing efforts to meet its inflation and employment objectives. Having already lowered policy rates three times in recent months to a record low of 0.75 percent, Governor Lowe said this conventional form of monetary policy is “still working”. Nevertheless, he also said that the RBA's preferred method of unconventional monetary policy would be a program of quantitative easing, involving the purchase of government bonds, but advised that officials would only consider such a program if and when they were to lower rates another 50 basis points to 0.25 percent.

New Zealand retail trade sales volumes rose 4.5 percent on the year in the three months to September, up from 2.9 percent in the three months to June, with stronger sales recorded for several major categories, including supermarket grocery stores and food & beverage services, motor vehicles and parts, and electrical & electronic goods. Singapore's manufacturing output rose 4.0 percent on the year in October, picking up from revised growth of 0.7 percent in September, and rose 3.4 percent on the month after advancing a revised 4.0 percent previously. Although electronics output improved to record modestly positive growth and growth in biomedical output was steady, other parts of the manufacturing sector recorded weaker growth. Hong Kong's merchandise trade deficit narrowed from HK$31.6 billion in September to HK$30.6 billion in October. Exports fell 9.2 percent on the year after dropping 7.3 percent previously, with demand from major markets, including China and the United States, again weak. Imports fell 11.5 percent after a decrease of 10.3 percent previously.

Looking forward

On Wednesday in Asia/Pacific, the New Zealand merchandise trade report is scheduled. In Europe, Italian business and consumer confidence figures are due. In North America, US releases are scheduled for the following: durable goods, GDP, jobless claims, personal income and outlays, and pending home sales data.

Global stock markets

 

Index

26 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

28121.68

55.21

0.2

 

NASDAQ

8647.93

15.44

0.2

 

S&P 500

3140.52

6.88

0.2

Canada

S&P/TSX Comp

17035.88

3.02

0.0

Europe

 

 

 

 

UK

FTSE 100

7403.14

6.85

0.1

France

CAC

5929.62

4.76

0.1

Germany

XETRA DAX

13236.42

-10.03

-0.1

Italy

MIB

23546.58

79.33

0.3

Spain

Ibex 35

9324.8

4.90

0.1

Sweden

OMX Stockholm 30

1740.99

-1.05

-0.1

Switzerland

SMI

10506.93

38.31

0.4

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6889.76

54.19

0.8

Japan

Nikkei 225

23373.32

80.51

0.3

 

Topix

1705.71

2.75

0.2

Hong Kong

Hang Seng

26913.92

-79.12

-0.3

S. Korea

Kospi

2121.35

-2.15

-0.1

Singapore

STI

3207.85

-12.78

-0.4

China

Shanghai Comp

2907.06

0.89

0.0

Taiwan

TAIEX

11576.82

15.24

0.1

India

Sensex 30

40821.3

-67.93

-0.2

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.