On 9 December 2019 – US, Europe weaker on China worries

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Apple stock hurt by trade worry ahead of Dec. 15 US tariff deadline.

US markets

US equities eased Monday in quiet trading on US-China trade worries and unexpectedly weak Chinese exports data, and as attention focused on pharma M&A.  The Dow industrials declined 0.4 percent, the S&P 500 fell 0.3 percent, and the NASDAQ was down 0.4 percent.

Among big pharma companies in focus, Merck was off 0.2 percent on news it is acquiring ArQule, a biotech which rocketed up 104 percent. Synthorx, another biotech, was up 171 percent after announcing its acquisition by Sanofi, the French pharma leader. Apple fell 1.4 percent on worries that the tech hardware leader could suffer significantly if a threatened 15 percent US tariffs on Chinese-made electronics take effect on Dec. 15. Meanwhile, Intel, the microchip leader, held up better, off 0.5 percent after announcing a new quantum memory chip.

Among sectors, internet stocks outperformed amid strength in communications services. Consumer staples and consumer discretionary stocks led the market, with utilities, health care and tech stocks trailing. Energy stocks softened as crude oil retreated after strong gains last week.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 11 cents to US$ 64.15, while gold rose by 10 cents to US$ 1,465.10. The US dollar fell against most major currencies. The US Treasury 30-year bond yield fell 2 basis points to 2.27 percent while the 10-year note yield fell 1 basis points to 1.83 percent.

European markets

Major European equities indexes edged down Monday on trade worries and weakness in energy and pharma stocks. The Europe-wide STOXX 600 eased 0.2 percent, the German DAX was off 0.5 percent, the French CAC fell 0.6 percent, and the UK FTSE-100 slipped 0.1 percent.

News that Chinese exports contracted a yearly 1.1 percent in November renewed concerns about the impact of the US-Chinese trade dispute on China, the world’s second-largest economy. And concerns over US-French trade are also building as the nation’s finance minister warned they are prepared to challenge US tariffs on French goods in the dispute over French taxes on US digital companies.

Meanwhile, energy stocks slipped as oil prices fell, and as Tullow, an Irish oil explorer, dropped after slashing its production guidance and suspending its dividend. Pharma stocks were hit as Sanofi, the French drugmaker fell 2 percent, and Roche, a Swiss pharma, fell 0.6 percent, as the both companies pursued pricy acquisitions. Among sectors, retail and basic resources outperformed, while oil & gas, travel & leisure, and autos lagged. Among companies reporting results, Air France-KLM fell 0.6 percent on an earnings miss, while Vontobel, the Swiss investment banks, rose 0.6 percent on positive earnings and news it would sell its equities business.

Markets were cautious ahead of Thursday’s ECB and Swiss National Bank monetary policy announcements, and Thursday’s UK elections. Latest UK polls show the Conservative Party gaining a working majority, and movement toward a final Brexit deal expected to follow in January.

Asia Pacific markets

Most major Asian markets closed moderately higher or flat Monday, with Chinese data showing weak export growth over the weekend limiting gains after strong US payrolls data boosted US markets Friday. Japan’s Nikkei and Topix indices increased 0.3 percent and 0.5 percent, respectively, while Australia’s All Ordinaries index closed up 0.3 percent. The Shanghai Composite index was little changed, up 0.1 percent, and Hong Kong’s Hang Seng index was flat on the day.

China’s trade surplus in US dollar terms narrowed from US$ 42.81 billion in October to US$ 38.73 in November. Exports fell 1.1 percent on the year in November after falling 0.9 percent in October, with exports to both the United States and the European Union registering weaker year-on-year growth. Imports fell 0.3 percent on the year, after falling 6.4 percent previously.

Revised estimates published Monday show Japan’s gross domestic product grew 0.4 percent on the quarter in the three months to September. This is well above the preliminary estimate of an increase of 0.1 percent published last month and the consensus forecast of 0.2 percent, but confirms a moderation in growth from the revised 0.5 percent increase in the three months to June. The upward revision to headline GDP growth compared with the previous estimate reflects stronger estimates for growth for most major categories of spending, including household consumption, private investment, and public demand. The drop in growth compared with the previous quarter was largely driven by weaker household consumption and public demand, partly offset by stronger private investment and net exports.

Looking forward

On Tuesday in Asia/Pacific, Chinese CPI and PPI reports are due for release. In Europe, French industrial production, Italian industrial production, UK monthly GDP, UK industrial production, and German ZEW figures are scheduled. In North America, Canadian housing starts as well as US productivity and costs data are due.

Global stock markets

Index

9 Dec 2019

Daily Change

% Change Daily

North America

United States

Dow

27909.6

-105.46

-0.4

NASDAQ

8621.83

-34.70

-0.4

S&P 500

3135.96

-9.95

-0.3

Canada

S&P/TSX Comp

16950.85

-46.12

-0.3

Europe

UK

FTSE 100

7233.9

-5.76

-0.1

France

CAC

5837.25

-34.66

-0.6

Germany

XETRA DAX

13105.61

-60.97

-0.5

Italy

MIB

22956.9

-225.82

-1.0

Spain

Ibex 35

9354.6

-28.10

-0.3

Sweden

OMX Stockholm 30

1743.31

0.70

0.0

Switzerland

SMI

10434.89

-28.99

-0.3

Asia/Pacific

Australia

All Ordinaries

6836.37

22.89

0.3

Japan

Nikkei 225

23430.7

76.30

0.3

Topix

1722.07

8.71

0.5

Hong Kong

Hang Seng

26494.73

-3.64

0.0

S. Korea

Kospi

2088.65

6.80

0.3

Singapore

STI

3179.82

-14.89

-0.5

China

Shanghai Comp

2914.48

2.47

0.1

Taiwan

TAIEX

11660.77

51.13

0.4

India

Sensex 30

40487.43

42.28

0.1

Note: all releases are listed in local time.

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