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On 27 November 2019 - Global shares: US, Europe firm on US-China trade hopes; Asia mixed

Anne D Picker

Anne D Picker - Econoday

US Economic Data Feed Expectations of Continued Moderate Growth.

US markets

US equities rose Wednesday on more optimism about a US-China trade deal after President Trump repeated that an agreement is close, and as US economic data bolstered expectations for steady, moderate growth.  The Dow industrials rose 0.4 percent, the S&P 500 gained 0.4 percent, and the NASDAQ was up 0.7 percent.

Consumer discretionary stocks led the way, with fast-food restaurants and retail stocks outperforming on analyst upgrades, especially sportswear companies Under Armour, up 6.2 percent, and Lululemon Athletica, up 2.7 percent. Communications services gained, led by telecom and media. Health care fared well, paced by pharma and biotech. Consumer staples lagged, with home and personal care weak. Industrials were the worst performer, largely on disappointing earnings from Deere, the heavy equipment maker, down 4.3 percent, after cutting its profits guidance on farm industry pain.

In US economic news, a surprisingly solid durable goods report suggested a rebound in manufacturing after recent contraction. Durable goods orders rose a monthly 0.6 percent in October, near the top of the range of forecasts. A downward revision to September from minus 1.1 percent to minus 1.4 percent only slightly detracted from the impression of unexpected strength. The less volatile ex-transportation orders outperformed the range of expectations with an October rise of 0.6 percent versus a revised 0.4 percent decline in September. In a separate report, economic growth was revised slightly stronger in the second look at the national accounts last quarter. At an annualized rate of 2.1 percent, real GDP expanded a few ticks more than the advance estimate and beat both the Econoday consensus and the second quarter's final 2.0 percent rate.

These data reflect observations at 4:00 PM US ET:  Dated Brent spot crude oil fell 9 cents to US$64.15, while gold fell by US$7.50 to US$1461.40. The US dollar rose against most major currencies, except sterling.  The US Treasury 30-year bond yield rose 1 basis point to 2.19 percent while the 10-year note yield rose 3 basis points to 1.77 percent.

European markets

Most major European equities indexes firmed Wednesday on hopes for a US-China trade pact after President Trump’s comment that the trade talks are in their “final throes.” The Europe-wide STOXX 600 rose 0.3 percent, the German DAX was up 0.4 percent, the French CAC remained virtually unchanged, and the UK FTSE-100 rose 0.4 percent. 

Telecom stocks were the leader on news that Germany’s Deutsche Telecom, up 1.4 percent, was considering a merger with France’s Orange, which rose 0.4 percent. Personal & household goods, media, and financials also outperformed, while oil & gas, chemicals, and construction & materials were the laggards.

UK stocks were bolstered by poll results showing a solid majority for the Conservative Party in December general elections, which is expected to bring an end to the long-running Brexit uncertainty, even if it means a weaker UK economy. UK mining shares and companies with Asia exposure were lifted by the positive US-China trade news. British-American Tobacco popped up 4.4 percent after raising its guidance.

Asia Pacific markets

Price action was again subdued in most major Asian markets Wednesday, with the regional data calendar light and investors still unclear about the timing and details of any US-China trade deal. The Shanghai Composite underperformed with a drop of 0.1 percent on the day, while Hong Kong’s Hang Seng index posted a small rise of 0.1 percent. Japan’s Nikkei and Topix indices both closed up 0.3 percent on the day. Australia’s All Ordinaries index was the main outlier, with a strong increase of 0.9 percent. This followed comments from Reserve Bank of Governor Philip Lowe late Tuesday advising that officials would consider introducing a program of quantitative easing if and when they were to lower the benchmark policy rate another 50 basis points to 0.25 percent.

New Zealand trade data published Wednesday showed its deficit narrowing from a revised NZ$1,319 million in September to NZ$1,013 million in October. Exports rose 4.3 percent on the year in October, up from growth of 2.6 percent in September, with strong demand for dairy products and from China offsetting weaker demand for forestry products and from the United States and the European Union. Imports fell 1.4 percent on the year after dropping 2.6 percent previously. Chinese industrial profits fell 2.9 percent year-to-date in October, after dropping 2.1 percent in September. Headline weakness was mainly driven by state-owned enterprises, whose profits fell 12.1 percent, partly offset by growth of 5.3 percent in the profits of private firms.

Looking forward

On Thursday in Europe, Swiss GDP, Eurozone M3 money supply, Eurozone EC Economic Sentiment, Italian PPI, and German CPI figures are due. US markets are on holiday.

Global stock markets

 

Index

27 Nov 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

28164

42.32

0.2

 

NASDAQ

8705.18

57.25

0.7

 

S&P 500

3153.63

13.11

0.4

Canada

S&P/TSX Comp

17100.57

64.69

0.4

Europe

 

 

 

 

UK

FTSE 100

7429.78

26.64

0.4

France

CAC

5926.84

-2.78

0.0

Germany

XETRA DAX

13287.07

50.65

0.4

Italy

MIB

23485.03

-61.55

-0.3

Spain

Ibex 35

9362.7

37.90

0.4

Sweden

OMX Stockholm 30

1737.8

-3.19

-0.2

Switzerland

SMI

10529.26

22.33

0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6950.63

60.87

0.9

Japan

Nikkei 225

23437.77

64.45

0.3

 

Topix

1710.98

5.27

0.3

Hong Kong

Hang Seng

26954

40.08

0.1

S. Korea

Kospi

2127.85

6.50

0.3

Singapore

STI

3215.53

7.68

0.2

China

Shanghai Comp

2903.2

-3.86

-0.1

Taiwan

TAIEX

11647.46

70.64

0.6

India

Sensex 30

41020.61

199.31

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.