Global stocks were mixed as trade stimulus faded

Global stocks were mixed as trade stimulus faded

US stocks edged lower in volatile trading Thursday. The progress in the China/US trade talks eased and investors preferred the real estate and utilities sectors.

US markets

US stocks edged lower in volatile trading Thursday. The progress in the China/US trade talks eased and investors preferred the real estate and utilities sectors. Initially, US shares were higher after a Chinese commerce ministry spokesman said Washington and Beijing were in close contact over trade, and any US trade delegation would be welcome.

The Dow Jones industrials were up 0.3 percent, the S&P inched down 0.54 points and the Nasdaq retreated 0.4 percent in choppy trading. The markets have also been pressured by worries of a potential U.S. government shutdown, interest rate increase and uncertainty around Brexit.

Retail stocks dropped including Under Armour. Procter & Gamble gained on a broker upgrade. General Electric jumped on a broker upgrade.

Apple said Thursday that it would expand its operations in Austin, Texas with a new $1 billion campus that would nearly double the size of the company’s current 6,000-employee work force in the area. The company said it also planned to establish new 1,000-worker operations in San Diego and Culver City, California along with Seattle, Washington. They also plan to add hundreds of workers in offices in New York, Pittsburgh, Pennsylvania and Boulder, Colorado over the next three years. Apple employs 90,000 people across the United States. The announcement comes as other tech giants seek to expand beyond their West Coast roots.

Initial jobless claims dropped to 206,000, a decrease of 27,000 from the previous week's revised level of 233,000. Import prices in the US plunged by much more than expected in the month of November amid a steep drop in fuel prices. Import prices sank by 1.6 percent in November after climbing by 0.5 percent in October. Export prices tumbled 0.9 percent in November following an upwardly revised 0.5 percent advance in October.

These data reflect observations at 4:00 PM US ET. Gold was down US$2.80 to US$1,247.20. Copper futures were down 0.09 percent to US$2. WTI spot crude was up US$1.95 to US$53.10. Dated Brent spot crude was up US$1.72 to US$61.87. The US dollar was up against the yen, Swiss franc and the euro. It retreated against the pound and the Canadian Australian dollars. The yield on the US Treasury 30 year bond was up 1 basis point to 3.16 percent while the 10 year note was unchanged at 2.91 percent.

European markets

European markets ended Thursday with mixed results. Traders were cautious amid some major ECB developments and the results of yesterday's UK vote. The European Central Bank left its interest rates unchanged Thursday and confirmed that it will end its four-year long massive €2.6 trillion Asset Purchase Programme in December, even the though the euro area economy indicates signs of a slowdown. The ECB also said it is "enhancing its forward guidance on reinvestment." ECB President Mario Draghi presented the latest ECB Staff macroeconomic projections, which revealed a further downgrade to growth for next year. The euro area growth forecast for 2019 was trimmed to 1.7 percent from 1.8 percent and the outlook for this year was cut to 1.9 percent from 2 percent.

British Prime Minister Theresa May survived the confidence vote last night. After yesterday's vote, May vowed to deliver the Brexit "people voted for" and also assured that she would seek legal and political assurances from EU leaders on the Irish backstop.

The Swiss National Bank left its interest rate unchanged at minus 0.75 percent and trimmed its inflation forecast for next year as it cited a strong franc and downside risks to the economy that could arise from a global slowdown. The SNB's new economic forecasts show real GDP expanding 2.5 percent in 2018, down from the 2.5 to 3.0 percent predicted in September and reflecting the surprise contraction in the third quarter. The 2019 call is 1.5 percent. At the same time, the inflation outlook has also been trimmed due to the slide in oil prices. The projection is now just 0.5 percent, down from 0.8 percent.

The FTSE slipped 2.69 points, the CAC was down 0.3 percent, the DAX lost 4.73 points and the SMI was 0.5 percent lower. TUI advanced after it reported earnings before tax of €972 million for the year ended 30 September 2018 compared to €1.08 billion prior year. Metro sank after its full year sales fell 1.6 percent. G4S jumped after it announced that it is reviewing options for the separation of the Group's Cash Solutions businesses. GAM Holding plunged in Zurich after it suspended its dividend. Novartis declined after the company announced that its Xolair prefilled syringe received approval from the European Commission. Roche and Nestle retreated.

Asia Pacific Markets

Asian markets rallied Thursday, extending recent gains amid rising optimism about a long-term trade deal between the US and China. Recent trade news has been encouraging. Investors are slowly building up positions, betting on hopes the US and China will work out a solution to their disputes. According to Reuters, some Chinese state-owned companies have purchased US soybeans for the first time in more than six months suggesting that China wants to implement agreements the US and Chinese Presidents arrived at during their meeting during the G20 summit earlier this month.

The Shanghai Composite jumped 1.2 percent, led by gains by Languang Development, Center International Group and Nanging Panda Electronics. The Hang Seng was 1.3 percent higher thanks to gains by China Resources, Geely Automobile, Galaxy Entertainment, Sands China and Shenzhou International.

The Nikkei was up 1.0 percent and the Topix was 0.6 percent higher. Auto stocks rallied sharply while electric machinery, banking, chemicals, and precision instruments sections also posted impressive gains.

The S&P/ASX and the All Ordinaries both inched up 0.1 percent. Mining and energy stocks were among the prominent gainers. Meanwhile, the Australian Competition and Consumer Commission, the competition watchdog, raised concerns that the planned merger of Vodafone Australia and TPG Telecom could mean higher mobile prices for consumers. TPG Telecom and Hutchison Telecom declined sharply.

The Kospi added 0.6 percent. The Sensex added 0.4 percent. The market also took in its stride the sudden exit of Urjit Patel as RBI governor and appeared quite encouraged by the swift move by the government that saw Shaktikanta Das taking charge on Wednesday. The new governor is set to steer the central board of the RBI on Friday. The board meeting is expected to discuss micro, small & medium enterprises that are under stress due to demonetization and implementation of the GST.

Looking forward

Japan releases its quarterly Tankan Survey. Japan posts December flash manufacturing index. China releases November fixed asset investment and industrial production and retail sales. India reports November merchandise trade and WPI. France, Germany and the Eurozone release composite flash PMIs. In the US, November retail sales and industrial production will be reported along with December flash composite PMI and October business inventories.

Global Stock Markets

    End 2018 Daily Percent Change
  Index 2017 Dec 12 Dec 13 Change Daily 2018 Yr/Yr
North America                
United States Dow 24719.22 24527.27 24597.38 70.11 0.3 -0.5 -0.4
  NASDAQ 6903.39 7098.31 7070.33 -27.98 -0.4 2.4 3.1
  S&P 500 2673.61 2651.07 2650.54 -0.53 0.0 -0.9 0.1
Canada S&P/TSX Comp 16209.13 14783.06 14750.35 -32.71 -0.2 -9.0 -7.9
UK FTSE 100 7687.77 6880.19 6877.50 -2.69 0.0 -10.5 -7.7
France CAC 5312.56 4909.45 4896.92 -12.53 -0.3 -7.8 -8.6
Germany XETRA DAX 12917.64 10929.43 10924.70 -4.73 0.0 -15.4 -16.4
Italy MIB 21853.34 18945.80 19048.83 103.03 0.5 -12.8 -14.2
Spain Ibex 35 10043.90 8853.40 8926.30 72.90 0.8 -11.1 -12.3
Sweden OMX Stockholm 30 1576.94 1494.21 1478.75 -15.46 -1.0 -6.2 -8.1
Switzerland SMI 9381.87 8861.14 8814.70 -46.44 -0.5 -6.0 -6.1
Australia All Ordinaries 6167.29 5727.26 5735.25 7.99 0.1 -7.0 -5.9
Japan Nikkei 225 22764.94 21602.75 21816.19 213.44 1.0 -4.2 -3.9
  Topix 1817.56 1606.61 1616.65 10.04 0.6 -11.1 -10.6
Hong Kong Hang Seng 29919.15 26186.71 26524.35 337.64 1.3 -11.3 -9.1
S. Korea Kospi 2467.49 2082.57 2095.55 12.98 0.6 -15.1 -15.1
Singapore STI 3402.92 3099.99 3111.08 11.09 0.4 -8.6 -9.5
China Shanghai Comp 3307.17 2602.15 2634.05 31.90 1.2 -20.4 -20.0
Taiwan TAIEX 10642.86 9816.45 9858.76 42.31 0.4 -7.4 -6.5
India Sensex 30 34056.83 35779.07 35929.64 150.57 0.4 5.5 8.1

Data Source — Haver Analytics

Bond markets

10-Yr Govt BondsClosing YieldChange Yield (bp)
US 2.91% 0
UK 1.29% 1
Germany 0.28% 1
Japan 0.05% 0
Australia 2.46% 2

Source — Bloomberg

Currencies and commodities

CurrencyDec 12Dec 13Change (%)
Japanese yen 113.2200 113.5900 -0.3%
Australian dollar 0.7224 0.7228 0.1%
Yuan 6.8800 6.8816 0.0%
Euro 1.1372 1.1363 -0.1%
British pound 1.2639 1.2662 0.2%
Swiss franc 0.9926 0.9936 -0.1%
Canadian dollar 0.7460 0.7490 0.4%

Source — Bloomberg 

CommoditiesDec 13Change
Brent Spot $61.83 2.80%
Gold $1,247.20 ($2.80)
Thompson-Reuters/ Jeffreys Commodity index 189.44 1.02%

Source — Bloomberg 

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