Market and Economic Update – Week Ending November 22, 2019
The S&P 500 closed lower by 0.3% at 3,110.29, down from 3,120.46
last week. This marked the first weekly decline in seven weeks, as concern over
the trade situation between the US and China emerged and sent stocks lower.
The materials sector declined 1.7% week-to-week, while real
estate lost 1.2%. The technology, industrials and consumer discretionary sectors
each fell 0.8%. Energy
declined 0.5%, communications services lost 0.4% and consumer staples fell
0.2%.
The healthcare sector had the largest percentage increase of the
week, up 0.8%, followed by a 0.5% advance for financials. Utilities increased
by 0.2%.
Friday’s Activity
Wall Street closed modestly in the green on Friday after
President Trump told Fox News he was “very close” to a trade deal with China.
Meanwhile, Chinese President Xi Jinping said Beijing wants to work a trade deal
with the US but is not afraid to “fight back.” On the macro side, consumer
sentiment for November came above expectations, while Markit’s gauges for the
US services and manufacturing sectors improved. The Dow Jones gained 109 points
or 0.4% to 27876. The S&P 500 added 7 points or 0.2% to 3110. The Nasdaq
climbed 14 points or 0.2% to 8520. Historically, the Dow Jones Industrial
Average reached an all-time high of 28155.33 in November of 2019.
European stocks closed mostly higher on Friday, with miners,
travel & leisure, media and auto sectors among the best performers, after
US President Donald Trump signaled a trade deal with Beijing could be reached
soon and that both countries had a "very good chance to make a deal."
On the other hand, weak PMI data from the UK and Euro Area pointed to another
month of contraction in the manufacturing sector, while Services PMI figures
also disappointed. The FTSE 100 jumped 88 points or 1.2%, amid a fall in
sterling; the DAX 30 added 26 points or 0.2%; the CAC 40 gained 12 points or
0.2%; and the IBEX 35 advanced 41 points or 0.4%; while the FTSE MIB lost 20
points or 0.1%. Historically, the UK FTSE 100 Stock Market Index reached an all-time
high of 7903.50 in May of 2018.
Asian Shares Mixed on Trade Negotiations
The Shanghai Composite lost 13 points or 0.45% to 2890 by 2:05pm CST after reports that U.S Navy warships sailed near islands claimed by China. China’s military confirmed that two U.S warships had sailed through contentious waterways and has urged the U.S to “stop these provocative actions to avoid any unforeseeable accidents”. The news added to doubts surrounding the U.S – China trade deal negotiations, following the U.S. backing for Hong Kong protesters. The Hang Seng added 58 points or 0.22% 26512; the Nikkei 225 added 89 points or 0.36% to 23121 and the Kospi added 5 points or 0.22% to 2101.
The Shanghai Composite lost 13 points or 0.45% to 2890 by 2:05pm CST after reports that U.S Navy warships sailed near islands claimed by China. China’s military confirmed that two U.S warships had sailed through contentious waterways and has urged the U.S to “stop these provocative actions to avoid any unforeseeable accidents”. The news added to doubts surrounding the U.S – China trade deal negotiations, following the U.S. backing for Hong Kong protesters. The Hang Seng added 58 points or 0.22% 26512; the Nikkei 225 added 89 points or 0.36% to 23121 and the Kospi added 5 points or 0.22% to 2101.
Australian Shares Close Higher
The ASX 200 added 36.9 points or 0.55% to 6709.8 on 22nd November. WBC Westpac Banking lost 0.39 points or 1.55% to 24.77 after issuing an apology for its “systemic non-compliance” of anti-money laundering and counter-terrorism financing laws. Westpac’s Chairman Lindsay Maxsted said “as a Board, and as individuals, we are devastated by the issues raised by AUSTRAC in its recent statement of claim.” The biggest gains of the session included AVH Avita medical (0.04 points or 7.69% to 0.56), IPH IPH Limited (0.41 points or 5.26% to 8.2) and JIN Jumbo International (1.04 points or 5.21% to 20.99). Biggest losses were led by MYX Mayne Pharma (-0.06 points or -11.01% to 0.49), MTS Metcash Limited (-0.21 points or -6.91% to 2.83) and OML Ooh Media (-0.15 points or -5.03% to 2.83).
The ASX 200 added 36.9 points or 0.55% to 6709.8 on 22nd November. WBC Westpac Banking lost 0.39 points or 1.55% to 24.77 after issuing an apology for its “systemic non-compliance” of anti-money laundering and counter-terrorism financing laws. Westpac’s Chairman Lindsay Maxsted said “as a Board, and as individuals, we are devastated by the issues raised by AUSTRAC in its recent statement of claim.” The biggest gains of the session included AVH Avita medical (0.04 points or 7.69% to 0.56), IPH IPH Limited (0.41 points or 5.26% to 8.2) and JIN Jumbo International (1.04 points or 5.21% to 20.99). Biggest losses were led by MYX Mayne Pharma (-0.06 points or -11.01% to 0.49), MTS Metcash Limited (-0.21 points or -6.91% to 2.83) and OML Ooh Media (-0.15 points or -5.03% to 2.83).
Commodities
Top commodity losers Friday were Feeder Cattle (-4.56%),
Platinum (-2.90%)
and Cocoa (-2.26%).
Gains are led by Natural
gas (2.49%), Palm
Oil (2.39%) and Baltic
Dry (2.31%). The Baltic index, which provides a benchmark for the price of
moving the major raw materials by sea, increased for the first time in seven
sessions, supported by stronger demand for capesize vessels. The index went up
29 points, or 2.3%, to 1,284 points. Natural gas prices rose as much as 2.1% to
$2.64/MMBtu around 11:40 AM NY time on Friday, as cold weather forecasts across
much of the US are extending a rally in prices. Prices were also supported
after the latest EIA data showed a larger-than-expected drop in US natural gas
stocks. US crude oil prices dropped as much as 1.3% to $57.82 per barrel around
10:45 AM NY time on Friday, retreating from a near two-month high of $58.75 per
barrel early this session, as optimism over a potential trade deal between the
world’s two largest economies faded. Still, expectations that OPEC and its
allies will extend supply cuts until mid-2020 to support the market and recent
tensions in Iran and Iraq offered some support to prices. Brent crude oil
slumped nearly 0.6% to $63.46 per barrel. Gold prices jumped nearly 0.3% to
$1,468.9 an ounce around 09:40 AM NY time on Friday, amid persistent doubts that
Washington and Beijing will be able to reach a trade deal. On one hand, the US
Congress passed two bills in support of Hong Kong’s protesters a move that
could increase tensions between the two countries, but on the other the Chinese
Vice Premier Liu He invited top US trade negotiators for a new round of
face-to-face talks. Meantime, Silver prices added as much as 0.1% to $17.09 an
ounce.
The Kansas City Fed's Manufacturing Production Index fell to -5
in November 2019 from +8 in the previous month and compared with market
forecasts of +9. The composite index, an average of the production, new orders,
employment, supplier delivery time, and raw materials inventory indexes, was
unchanged at -3, driven by slower activity at durable goods plants, especially
from decreases in primary metal, fabricated metal products, machinery, and
computer and electronic products manufacturing. The new orders and employment
indexes remained negative and the materials inventory index declined further.
However, the shipments and supplier delivery time indexes expanded somewhat.
Kansas Fed Manufacturing Index in the United States averaged 8.03 Index Points
from 2001 until 2019, reaching an all-time high of 37 Index Points in March of
2017 and a record low of -32 Index Points in November of 2008.
The University of Michigan's consumer sentiment for the US was
revised higher to 96.8 from 95.7 in November of 2019 and compared with 95.5 in
October. It is the highest reading in four months, nearly close to the average
of 97 since the start of 2017. Consumer expectations improved and the current conditions
sub-index declined less than initially anticipated. Consumer Confidence in the
United States averaged 86.62 Index Points from 1952 until 2019, reaching an all-time
high of 111.40 Index Points in January of 2000 and a record low of 51.70 Index
Points in May of 1980.
The IHS Markit US Services PMI rose to 51.6 in November 2019
from 50.6 in the previous month and above market consensus of 51.0, a
preliminary estimate showed. Employment increased for the first time since
August while new business remained historically weak. On the price front,
service sector firms increased their selling prices at a faster rate,
reportedly due to a slightly quicker rise in input costs. Looking ahead,
business confidence fell, amid reports of less favorable demand conditions.
Services PMI in the United States averaged 54.52 Index Points from 2013 until
2019, reaching an all-time high of 61 Index Points in June of 2014 and a record
low of 49.30 Index Points in October of 2013.
The IHS Markit US Manufacturing PMI rose to 52.2 in November
2019 from 51.3 in the previous month and beating market expectations of 51.5, a
flash estimate showed. The latest reading pointed to the steepest expansion in
the factory sector since April, as output increased at the fastest pace in ten
months amid strong client demand. Manufacturing PMI in the United States
averaged 53.64 from 2012 until 2019, reaching an all-time high of 57.90 in
August of 2014 and a record low of 50.30 in August of 2019.
Looking Ahead to Next Week
It will be a busy week in US with 2nd estimate of Q3 GDP growth,
personal income and outlays, PCE prices, durable goods and new and pending home
sales. Here are some other key events: UK consumer morale; Germany retail
sales, consumer and business confidence; China NBS PMIs and industrial profits;
Japan industrial output, retail sales and consumer confidence; India Q3 GDP growth;
and Australia private capital expenditure.
bullvalleyadvisors.com
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