Germany narrowly avoids recession25 Nov 2019
The German economy narrowly missed recession and grew 0.1% in the third quarter of the year after contracting by 0.2% in the second quarter. Germany’s export driven manufacturers found some relief as exports grew 1% during the quarter. US-China trade wars have hurt Eurozone’s economy with the manufacturing Purchasing Managers Index for November contracting at 46.6.
Gold relatively flat on trade wars confusion25 Nov 2019
Gold price retreated at the start of the month when optimism built in markets around a phase one trade deal between US and China. Since then however, the two countries have not moved towards an agreement with clarity and conviction. Gold price has moved relatively sideways in the last two weeks and remains reactive to developments on the trade front.
US stocks lose momentum25 Nov 2019
The S&P 500 Index was unable to make last week its sixth consecutive week of gains as negative developments on the US-China trade front thwarted the bull run for US equities. Optimism around a phase one deal between the two countries before the end of the year has dwindled since last week as both sides have hinted towards meaningful disagreements between them.
European equities join the risk-on rally11 Nov 2019
European equities also rose last week bolstered by US equity markets and an improvement in third quarter earnings. The Stoxx 600 Index rose for the fifth week in a row. Among 80% of the constituents that have reported on the Stoxx 600 Index, 50% have surpassed consensus estimates both on top line revenue growth and bottom line earnings growth. This is the highest percentage in the last 6 quarters.
Haven commodities lose steam11 Nov 2019
Gold hit a three-month low last week at $1464/oz on the back of a broader risk-on sentiment in the markets. Flows out of gold funds primarily drove the price down even though speculative positioning in the precious metal remains elevated. Silver, on account of its strong correlation with gold, had a similar trajectory and traded around $17/oz- just slightly above its three-month low.
US stocks rally further11 Nov 2019
US equity market indices including the Dow Jones, the S&P 500 Index and the Nasdaq all posted record highs last week. Optimism surrounding the completion of the first phase of the US-China trade deal, the pickup in long term US Treasury yields and better than expected earnings release for the third quarter provided a tailwind to US equity markets.
Cautious trade optimism lifts cyclical commodities04 Nov 2019
Industrial metals and agricultural commodities, which have meaningfully been hit since the advent of US-China trade tensions, have found support in the last two weeks from optimism returning in market sentiment regarding an upcoming deal between the two countries. A statement from the office of US trade representative Robert Lighthizer noted that he and Treasury Secretary Steven Mnuchin “had a constructive call” with China’s Vice Premier Liu He on phase one of the US-China trade agreement.
Saudi Aramco Initial Public Offering (IPO) launched04 Nov 2019
Saudi Arabia launched the IPO of Saudi Aramco on the local Tadawul exchange in a bid to raise as much as $60bn with a sale of up to 3% of the company. The process has been delayed in recent months by questions over the valuation of Saudi Aramco, with bankers and analysts estimating $1.2tn to $1.5tn to be more realistic than the Saudi government’s desired valuation of $2tn. The kingdom may therefore be keen to increase oil prices to achieve a higher valuation.
US stocks rose for a fourth week in a row04 Nov 2019
The large cap S&P 500 index and the technology heavy Nasdaq composite Index attained new intraday and closing highs on the back of a strong monthly jobs report, healthy momentum from third quarter earnings and US Federal Reserve’s third interest rate cut for the year. The CBOE Volatility Index (VIX) touched a four-month low in response to the improvement in sentiment.
EU agrees to a flexible UK extension until end of January28 Oct 2019
The EU has agreed to extend the Brexit deadline to the end of January 2020 giving the UK the possibility to leave earlier if Boris Johnson’s deal with the EU is ratified by the parliament. The UK parliament had earlier voted to support the general principles of the deal but to slow down the timetable beyond the previously stipulated October 31st deadline. The UK parliament is now expected to agree on calling a general election in December.