Global markets retreated again on Wednesday; US markets were closed

Global markets retreated again on Wednesday; US markets were closed

Markets on Wall Street were closed Wednesday in observance of a national day of mourning for former U.S. President George H.W. Bush.

US markets

Markets on Wall Street were closed Wednesday in observance of a national day of mourning for former U.S. President George H.W. Bush.

The Federal Reserve published its Beige Book in preparation for the December 18 and 19 FOMC meeting. Most of the twelve Federal Reserve districts reported that their economies expanded at a modest or moderate pace from mid-October through late November. The Fed noted both the Dallas and Philadelphia districts saw slower growth while the St. Louis and Kansas City districts saw just slight growth.

Consumer spending according to the Beige Book held steady on balance, as growth of non-auto retail sales appeared somewhat weaker but auto sales tended to improve, particularly for used cars. While tariffs remained a concern for manufacturers, a majority of districts continued to report moderate growth in the sector.

Labor markets tightened further across a broad range of occupations, with over half of the districts citing firms for which employment, production and sometimes capacity expansion had been constrained by an inability to attract and retain qualified workers.

The Beige Book said prices rose at a modest pace in most districts, although a few noted moderate increases. Nearly all districts reported that input costs rose faster than final goods prices.

The report noted optimism in some districts has waned, as contacts cited increased uncertainty from the impacts of tariffs, rising interest rates, and labor market constraints.

These data reflect observations at 4:00 PM US ET. Gold was down US$4.00 to US$1,242.60. Copper futures were up 0.47 percent to US$2.77. WTI spot crude was down 21 US cents to US$53.04. Dated Brent spot crude was down 35 US cents to US$61.73. The US dollar was up against the yen and the Canadian and Australian dollars. It retreated against the pound and was virtually unchanged against the euro and Swiss franc. The Dollar Index was up 0.42 percent. US bond market was closed.

European markets

European stocks tumbled Wednesday, continuing Tuesday’s decline. Traders were concerned that the initial positive reaction on Monday to the trade truce reached by the US and China at the G20 summit over the weekend was overdone. There is skepticism and confusion about the truce after China promised action but gave no details on the tentative truce. Brexit-related uncertainty also contributed to the negative mood after Theresa May's government suffered three successive defeats in the British Parliament on Tuesday. The FTSE and CAC slid 1.4 percent, the DAX lost 1.2 percent and the SMI tumbled 1.6 percent.

Deutsche Bank slipped after reportedly settling a probe into controversial tax deals. Daimler was lower. Air France KLM declined after the leader of its pilots' union lost his bid for re-election. Shire rallied after Japan's Takeda Pharmaceutical Company announced that its shareholders approved resolutions related to the proposed acquisition of the UK drug-maker.

Roche declined — the company was granted priority review by the US FDA for Tecentriq immunotherapy in combination with chemotherapy, for the treatment of extensive-stage small cell lung cancer. Both Novartis and Nestlé declined. UBS, Credit Suisse and Julius Baer finished lower. Persimmon, Berkeley Barratt Development and Taylor Wimpey advanced.

Eurozone retail sales were up a monthly 0.3 percent after retreating 0.5 percent in September. November Eurozone composite PMI declined to 52.7 from October's 53.1. UK services sector growth slowed to its weakest level in nearly two-and-a-half years in November, amid weaker growth in business activity and new work as Brexit concerns intensified. The CIPS UK Services PMI fell to 50.4 from 52.2 in October, marking the lowest level since July 2016.

Asia Pacific Markets

Asian stocks were broadly lower Wednesday. Investors were concerned about trade and worrying signals of economic health after the difference between three and five-year US Treasury yields dropped below zero. Traders were skeptical around the Trump-Xi agreement announced over the weekend.

In China, traders paid little attention to encouraging services data. The Shanghai Composite declined 0.6 percent while Hong Kong's Hang Seng tumbled 1.6 percent. China’s services sector continued to expand in November and at an accelerated rate with the latest reading of the PMI at 53.8.

Both the Nikkei and Topix were down 0.5 percent. Fanuc and Rohm retreated. In the tech sector, Advantest and Tokyo Electron were down. Takeda rose after it received shareholder approval to acquire Irish pharmaceuticals firm Shire in a deal worth around US$60 billion. November services PMI reading slipped to 52.3 from 52.4.

Both the S&P/ASX and All Ordinaries were down 0.8 percent. Third quarter GDP was up a quarterly 0.3 percent and down from 0.9 percent in the second quarter. On the year, GDP was up 2.8 percent, down from 3.4 percent on the year. The big four banks declined while BHP and Rio Tinto advanced while energy majors Oil Search, Origin Energy, Beach Energy and Santos retreated.

The Kospi lost 0.6 percent. The Sensex was 0.7 percent lower. Indian shares finished lower after the Reserve Bank of India left its key interest rate unchanged at 6.5 percent and said it sees upside risks to the inflation outlook. The RBI maintained its policy stance of "calibrated tightening" while reducing the statutory liquidity ratio to make banks increase their lending.

Looking forward

Australia posts October retail sales and merchandise trade balance. Germany posts October manufacturers’ orders. In the US, November ADP private employment, October merchandise trade balance, third quarter productivity & costs, October factory orders and weekly jobless claims, money supply and fed balance sheet will be released.

Global Stock Markets

    End 2018 Daily Percent Change
  Index 2017 Dec 4 Dec 5 Change Daily 2018 Yr/Yr
North America                
United States Dow 24719.22 25027.07 * * * * *
  NASDAQ 6903.39 7158.43 * * * * *
  S&P 500 2673.61 2700.06 * * * * *
Canada S&P/TSX Comp 16209.13 15063.59 15182.64 119.05 0.8 -6.3 -4.6
                 
Europe                
UK FTSE 100 7687.77 7022.76 6921.84 -100.92 -1.4 -10.0 -5.8
France CAC 5312.56 5012.66 4944.37 -68.29 -1.4 -6.9 -8.0
Germany XETRA DAX 12917.64 11335.32 11200.24 -135.08 -1.2 -13.3 -13.8
Italy MIB 21853.34 19353.43 19328.70 -24.73 -0.1 -11.6 -13.4
Spain Ibex 35 10043.90 9061.70 9012.20 -49.50 -0.5 -10.3 -11.5
Sweden OMX Stockholm 30 1576.94 1506.43 1478.96 -27.47 -1.8 -6.2 -7.3
Switzerland SMI 9381.87 9085.00 8939.96 -145.04 -1.6 -4.7 -4.0
                 
Asia/Pacific                
Australia All Ordinaries 6167.29 5797.54 5749.10 -48.44 -0.8 -6.8 -4.7
Japan Nikkei 225 22764.94 22036.05 21919.33 -116.72 -0.5 -3.7 -1.2
  Topix 1817.56 1649.20 1640.49 -8.71 -0.5 -9.7 -7.1
Hong Kong Hang Seng 29919.15 27260.44 26819.68 -440.76 -1.6 -10.4 -5.0
S. Korea Kospi 2467.49 2114.35 2101.31 -13.04 -0.6 -14.8 -15.1
Singapore STI 3402.92 3167.79 3155.92 -11.87 -0.4 -7.3 -7.1
China Shanghai Comp 3307.17 2665.96 2649.80 -16.16 -0.6 -19.9 -19.6
Taiwan TAIEX 10642.86 10083.54 9916.74 -166.80 -1.7 -6.8 -4.6
India Sensex 30 34056.83 36134.31 35884.41 -249.90 -0.7 5.4 10.1
*Markets closed              

Data Source — Haver Analytics

Bond markets

10-Yr Govt BondsClosing YieldChange Yield (bp)
US * *
UK 1.31% 3
Germany 0.27% 2
Japan 0.06% 0
Australia 2.50% -3
*US market closed    

Source — Bloomberg

Currencies and commodities

CurrencyDec 4Dec 5Change (%)
Japanese yen 112.7700 113.2400 -0.4%
Australian dollar 0.7338 0.7266 -1.0%
Yuan 6.8360 6.8568 -0.3%
Euro 1.1340 1.1340 0.0%
British pound 1.2713 1.2730 0.1%
Swiss franc 0.9976 0.9980 0.0%
Canadian dollar 0.7545 0.7475 -0.9%

Source — Bloomberg 

CommoditiesDec 5Change
Brent Spot $61.73 -0.56%
Gold $1,242.60 ($4.00)
Thompson-Reuters/ Jeffreys Commodity index 190.09 -0.20%

Source — Bloomberg 

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