After last week’s decline, stocks rallied on Monday led by the energy sector as oil rebounded around 2%, and hopes that there will be a thaw in trade talks at the G20 meeting. Also there were signs that Italy may compromise on its budget. These factors added 1.6% to SPX, risk-sensitive NDX was up 2.1%. European indices and NKY were also up. DXY was up very slightly at 0.1% mostly driven by a retreat in JPY in line with the stock recovery, otherwise the currency markets were flat. Italian yields were down 14bp on the budget news, US yields were flat in line with USD.
Tuesday November 27
Another positive day for US stocks, although the gains were in defensives (XLV, XLP, XLU), whereas risk (tariff-exposed) stocks fell. NKY was up, supported by a weaker JPY, which in turn was driven by the US rise. NDX was flat, but the interesting move was between AAPL and MSFT which spent the day vying for the top spot as most valuable company in the world. AMZN is now trailing in third place, and the resurgence of the 32-year old (ancient in tech terms) stock is quite notable. In the last three months, Jeff Bezos net worth has fallen by nearly $30 billion, whereas Bill Gates wealth has stayed pretty much the same. Like NDX, DAX and FTSE were also flat on the day.
DXY was clearly up (0.34%) today. A lot of this was attributable to the 0.8% fall in GBP as it became clear that MPs in Theresa May’s party would not accept or vote for her Brexit deal. The dollar’s gain against other currencies was consistent, but relatively modest. Gold fell sharply by nearly 1% in the early US session, for no particular reason. Oil was up 1%, which is relatively mild given recent moves.
Wednesday November 28
The big event today was the speech by Fed Chair Powell at 1700, where he indicated that there was ’no preset policy’ and rates were ‘just below’ neutral. As we mentioned in some detail last week, the current projection is a path to 3.125% which is not ‘just above’ 2.25%. The speech was seen as dovish, and in minutes, indices shot up whilst the dollar nosedived. Surprisingly yields only dipped slightly. All equity indices had been rising anyway, and were well up on the day. DXY had been rising, the fade at 1700 was an immediate 0.6%, and 0.77% an hour later. The basket closed 0.55% on the day, with corresponding appreciation from other currencies and Gold. Oil was down in the open outcry session, but ended the day up in line with the weaker dollar and stronger stocks.
Thursday November 29
With Chair Powell speaking the day before, the Fed minutes were bound to prove a non-event and this was the case. Markets hardly moved on the release at 1900. After three green days, there was a slight pullback in SPX and the non-US indices, as markets worried about the Trump/Xi G20 meeting. The dollar hardly moved as well, with DXY down 0.06%. GBP gave up all Wednesday’s soft dollar gains, on the Brexit Parliament problem, as were JPY, CAD and Gold, but a slight gain in EUR cancelled this out. AUD was the only other currency up on the day. Yields dropped, at one point falling below 3%, to end 2bp down on the day, a delayed reaction to the dollar weakness on Wednesday. Oil was up 2.1% on reports that Russia may be cutting supply.
Friday November 30
The upward trend of the week resumed today, with SPX adding 0.8%, to close the week 5.15% up, its best week for seven years. NKY followed suit, but DAX and FTSE fell, possibly a delayed reaction to the weaker dollar, but more likely because they are on the wrong side of the trade war. There may of course also have been an end-of-month rotation into US stocks. BTP yields rose slightly on Friday as well.
DXY was up 0.45% as EUR followed GBP the day before in giving up its Powell-inspired sharp gains. All currencies and Gold were down. However, yields continued to fall, down 3bp on the day. Oil gave up most of the previous day’s gains..
Please note all figures and percentages given for daily movement on indices cover the entire cash and futures period in that day.
WEEKLY PRICE MOVEMENT
A definite equity recovery this week, especially in the US where SPX added 5.15%, NDX did even better, adding 6.69%, and NFLX went up over 10%. The picture was mixed in forex, and the best trade would have been to buy NZDJPY for 1.83%. Cryptos continued their slide, although there has been some recovery since the cut-off point.
AUDUSD 0.7316 (+1.09%)
EURGBP 0.8868 (+0.25%)
EURUSD 1.1318 (-0.22%)
GBPUSD 1.2762 (-0.47%)
NZDUSD 0.6875 (+1.33%)
USDCAD 1.3296 (+0.42%)
USDJPY 113.51 (+0.50%)
DAX 11335 (+1.38%)
FTSE 7022 (+0.98%)
NIFTY 10877 (+3.33%)
NKY 22413 (+4.17%)
SPX 2763.2 (+5.15%)
GOLD 1222.39 (+0.08%)
OIL 50.85 (+0.95%)
BTCUSD 4039 (-8.68%)
ETHUSD 113.68 (-9.20%)
FB 140.61 (+6.74%)
AAPL 178.58 (+3.65%)
AMZN 1690.17 (+12.52%)
NFLX 286.13 (+10.55%)
GOOGL 1109.65 (+7.72%)
(Crypto prices are given as at 0000GMT Saturday, after the other markets close.)
NEXT WEEK (all times are GMT)
(Calendar High volatility items are in bold).
The day will be dominated by the outcomes from the G20 Summit, where some overhaul of the WTO was agreed, and President Trump agreed to delay tariff increases on China until next year. At the time of writing the IG Markets weekend index (an OTC market) has the DJIA and DAX both up nearly 1%. The day’s news consists mostly of PMIs although we have two Fed speakers, Brainard (dovish, 2018/2019 voter) and Kaplan (centrist, non-voter) later in the day.
21:30 AUD Aus AiG Performance of Mfg Index (Sunday)
00:30 AUD Aus Building Permits (MoM)
01:45 CNY China Caixin Manufacturing PMI
08:55 EUR Germany Markit Manufacturing PMI
09:00 EUR Eurozone Markit Manufacturing PMI
09:30 GBP UK Markit Manufacturing PMI
14:30 CAD Canada Markit Manufacturing PMI
15:00 USD ISM Manufacturing PMI/Prices Paid (PMI est 57.8 prev 57.7)
15:30 USD FOMC Member Brainard Speech
17:30 GBP MPC Member Haldane Speech
18:00 USD FOMC Member Kaplan Speech
Tuesday December 04
Today may see the ECJ opinion on a suit filed by a group of Scottish politicians as to whether Brexit could be reversed, should the British government want to. BoE Governor Carney is taking place in an online Q&A about the future of money, but as always, he may say something about rates or Brexit. As well as Australia, there is a rate decision on CLP.
03:30 AUD RBA Rate Decision/Statement (est 1.5% hold)
09:15 GBP BoE Governor Carney speech
09:30 GBP UK PMI Construction
14:00 NZD NZ GDT Milk Price Index
18:00 GBP MPC Member Vlieghe speech
21:30 WTI API Stock
Wednesday December 05
A surprise decision by President Trump to declare today a national day for mourning for President George HW Bush means US markets are closed. The main news of the day is the Canadian rate decision. The market will be looking at the statement for hints of a future rate hike path. There are also rate decisions on PLN and INR, a 25bp cut is expected in the latter.
00:30 AUD Australia GDP
01:45 CNY China Caixin Services PMI
08:00 EUR ECB non-MPC minutes
08:55 EUR Germany Markit Services/Composite PMI
09:00 EUR Eurozone Markit Services/Composite PMI
09:30 GBP UK Markit Services PMI
13:15 USD US ADP Employment Change/Productivity/Labor Costs
14:45 USD US Markit Services/Composite PMI
15:00 USD US ISM Non-Manufacturing PMI
15:00 CAD BoC Rate Decision/Statement (est 1.75% hold)
15:15 USD Fed Chair Powell Speech
15:30 WTI EIA Stock
19:00 USD Fed Beige Book
Thursday December 06
OPEC meet in Vienna for their 175th Ordinary Meeting. Cuts, as always, are on the agenda. It is Constitution Day in Spain, a public holiday, but the BME is not closed. However reduced volume is likely.
00:30 AUD Aus Retail Sales s.a. (MoM)
00:30 AUD Aus Imports/Exports/Trade Balance
01:15 USD Fed Quarles speech
09:05 AUD RBA Assist Gov Debelle Speech
13:30 USD US Trade Balance
13:30 USD Jobless Claims
13:30 CAD Canada International Merchandise Trade
15:00 USD US Factory Orders (MoM)
15:00 CAD Canada Ivey PMI
23:30 AUD Aus AiG Performance of Construction Index
23:30 JPY Japan Overall Household Spending (YoY)
23:45 USD Fed Powell Speech
Friday December 07
The ruling German CDU party conference started on Thursday, but today an election is scheduled for the new leader. Chancellor Merkel has indicated last month that she will step down in 2021. NFP day is always important, and today’s estimate is higher than the usual 190k and higher than the Wednesday ADP estimate of 189k. However, the average hourly earnings is probably more important.
05:00 JPY Leading Economic/Coincident Index
07:00 EUR Germany Industrial Production
10:00 EUR Eurozone GDP
13:30 USD US NFP/AHE/Unemp/Participation (NFP est 205k prev 250k)
13:30 CAD Canada NFP/Unemp/Participation (NFP est 10k prev 11.2k)
14:00 EUR Germany CDU party leader election (time approx.)
15:00 USD Michigan Consumer Sentiment Index
17:15 USD FOMC Member Brainard Speech
18:00 WTI Baker Hughes Rig Count
20:00 USD US Consumer Credit Change