Global stocks tumbled to end the week
Global stocks tumbled to end the week
Stocks moved sharply lower Friday with the Dow Jones industrials and the S&P tumbling to their lowest closing levels in seven and eight months, respectively. The Dow retreated 2.0 percent while the S&P was 1.9 percent lower. Nasdaq dropped 2.3 percent. For the week, the Dow was down 1.2 percent, the S&P declined 1.3 percent and the Nasdaq was 0.8 percent lower.
The declines followed renewed concerns about the global economic growth outlook after disappointing Chinese data for industrial output and retail sales growth. Industrial output grew at its slowest pace in nearly three years, increasing only by 5.4 percent in November after growing by 5.9 percent a month earlier. Meanwhile, retail sales in China grew 8.1 percent in November, the weakest growth since 2003. In October, retail sales were up 8.6 percent. The slower pace of industrial output and retail sales growth was partly due to the impact of the ongoing trade dispute with the US.
November retail sales were up 0.2 percent thanks to a steep drop in gas sales even though underlying retail sales growth remained strong. Core retail sales, which exclude autos, gasoline, building materials and food services, increased 0.9 percent after climbing by an upwardly revised 0.7 percent in October. November industrial production was up 0.6 percent on the month. However, manufacturing was unchanged.
Costco Wholesale dropped after reporting a fall in quarterly gross margin and was the biggest laggard in consumer staples. Walgreens Boots Alliance declined on a broker downgrade. Apple was down with some reports citing a top analyst slashing an iPhone sales estimate for the decline. Johnson & Johnson was the biggest drag after it was reported the company knew for decades that its Baby Powder contained asbestos.
These data reflect observations at 4:00 PM US ET. Gold was down US$6.00 to US$1,241.40. Copper futures were down 0.16 percent to US$2.76. WTI spot crude was down US$1.38 to US$51.20. Dated Brent spot crude was down US$1.17 to US$60.28. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. It retreated against the yen. The yield on the US Treasury 30 year bond was down 3 basis points to 3.14 percent while the 10 year note was down 2 basis points to 2.89 percent.
European stock markets retreated Friday but were mostly higher for the week. On Friday, the FTSE and DAX both lost 0.5 percent, the CAC retreated 0.9 percent and the SMI was 1.1 percent lower. However, for the week, the FTSE added 1.0 percent the CAC gained 0.8 percent, the DAX was up 0.7 percent but the SMI lost 0.3 percent.
Disappointing Chinese economic data weighed on the markets at the start of the day. November industrial output and retail sales were weaker than expected. Reports on industrial production in Germany and manufacturing activity in the Eurozone, France and Germany also contributed to the negative mood among investors.
New passenger car registrations in the European Union declined for a third straight month in November, the European Automobile Manufacturers Association (ACEA) said Friday. Demand for new cars fell 8 percent on the year following a 7.3 percent slump in October and a 23.5 percent plunge in September. Flash Composite PMIs, which combines manufacturing and services, fell to a 49-month low of 51.3 from 52.7 in November. December German composite PMI expanded at the slowest pace in four years during December amid slower growth in manufacturing and services. The flash Composite Purchasing Managers' Index fell to a 48-month low of 52.2 from 52.3 in November. French composite PMI slid to 49.3 from 54.2.
LVMH was down after it agreed to acquire Belmond for an equity value of $2.6 billion. Roche dropped along with Nestle and Novartis. The weak Chinese data weighed on shares of the luxury goods companies including Swatch Group and Richemont. Julius Baer, Crédit Suisse and UBS also retreated.
Asia Pacific Markets
Asian markets ended lower Friday, hurt by the disappointing pace of November industrial output and retail sales growth in China. Worries about slowing global economic growth along with skepticism about the China and US trade deal weighed as well on Asian markets.
The latest batch of economic data showed China's industrial output grew at its slowest pace in nearly three years, increasing by 5.4 percent in November. Retail sales grew 8.1 percent in November, the weakest growth since 2003. In October, retail sales were up 8.6 percent. The slower pace of industrial output and retail sales growth was due to the impact of the ongoing trade disputes with the US. The Shanghai Composite was down 1.5 percent while Hang Seng tumbled 1.6 percent
The Japanese market ended lower despite a fairly decent Tankan survey report. The Nikkei declined 2.0 percent while the Topix was 1.5 percent lower. Tokyo Dome along with Yahoo Japan, Tokyo Electron, Eisai and Trend Micro declined. Showa Denko KK, Mitsubishi Estate and Isetan Mitsukoshi Holdings moved up. The Bank of Japan said in its quarterly Tankan Survey that the index of business and manufacturing sentiment in Japan was steady in the fourth quarter of 2018. The large manufacturing index was unchanged with a score of +19, beating expectations for +18. The outlook came in at +15, shy of forecasts for +17 and down from +19 in the previous three months. The large non-manufacturing index came in at +24, topping forecasts for +21 and up from +22. The outlook was at +20, in line with forecasts and down from +22. All industry capex is seen higher by 14.3 percent, beating forecasts for 12.8 percent and up from 13.4 percent in the three months prior.
The Australian market ended lower, led by losses in information technology, bank and telecommunications stocks. Both the S&P/ASX and All Ordinaries were down 1.0 percent. Sigma Pharmaceuticals and Australian Pharma Industries jumped. Infigen Energy shares rallied. GWA Group and New Hope Corporation also advanced.
The Kospi was down 1.2 percent while the Sensex as 0.1 percent higher.
|Central Bank activities|
|Dec 18, 19||United States||FOMC Meeting and Announcement|
|Fed Chair Press Conference|
|Dec 20||UK||Bank of England Monetary Policy Announcement & Minutes|
|Japan||Bank of Japan Monetary Policy Announcement|
|The following indicators will be released this week...|
|Dec 17||EZ||Merchandise Trade (October)|
|Harmonized Index of Consumer Prices (November, final)|
|Dec 18||Germany||Ifo Survey (December)|
|Dec 19||UK||Consumer Price Index (November)|
|Producer Price Index (November)|
|Dec 20||UK||Retail Sales (November)|
|Dec 21||EZ||EC Consumer Confidence (December flash)|
|France||Gross Domestic Product (Q3.2018)|
|Consumption of Manufactured Goods (November)|
|UK||Gross Domestic Product (Q3.2018 final)|
|Dec 19||Japan||Merchandise Trade Balance (November)|
|Dec 20||Australia||Labour Force Survey (November)|
|Dec 17||United States||Empire State Survey (December)|
|Dec 18||United States||Housing Starts (November)|
|Canada||Consumer Price Index (November)|
|Dec 19||United States||Existing Home Sales (November)|
|Dec 20||United States||Philadelphia Fed Manufacturing (December)|
|Initial Unemployment Claims (week ending prior Saturday)|
|Leading Indicators (November)|
|Dec 21||Canada||Monthly GDP (October)|
|Retail Sales (October)|
|United States||Durable Goods Orders (November)|
|Gross Domestic Product (Q3.2018)|
|Personal Income and Spending (November)|
|Consumer Sentiment (December final)|
Global Stock Markets
|Index||2017||Dec 13||Dec 14||Change||Daily||2018||Yr/Yr|
|Sweden||OMX Stockholm 30||1576.94||1478.75||1471.67||-7.08||-0.5||-6.7||-7.7|
|Hong Kong||Hang Seng||29919.15||26524.35||26094.79||-429.56||-1.6||-12.8||-9.5|
Data Source — Haver Analytics
|10-Yr Govt Bonds||Closing Yield||Change Yield (bp)|
Source — Bloomberg
Currencies and commodities
|Currency||Dec 13||Dec 14||Change (%)|
Source — Bloomberg
|Thompson-Reuters/ Jeffreys Commodity index||186.64||-1.48%|
Source — Bloomberg
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