Markets Overview

It is a top down day with the markets higher across the globe on positive developments regarding the Sino-U.S. trade talks.  The negotiations were extended to include today after initially being schedule to end yesterday.  Both sides continue make encouraging commentary; however, details remain scant.  Investors may also have some relief this morning.   Pres. Trump did not make any drastic announcements last night in his address to the nation as he outlined his arguments for the border wall.  Icing on the cake came out of the U.K.  Late yesterday, Parliament passed a measure which makes the “no deal” Brexit scenario more difficult to occur.

Here is how sectors performed across Asia and Europe.  Asia saw all the major sectors advance with many higher by 1% or more including: financials, consumer discretionary, IT, telcos, consumer staples and healthcare.  Europe is also seeing most sectors green.  Autos are higher by more than 3% with basic resources and tech improving more than 2%.  Telcos are off by c. 1% with utilities down small.

There were a number of important macro developments.  Reports after the local close indicate China is targeting a 2.8% deficit target for this year.  A Bloomberg survey reveals economists have pushed back their expectations for a rate hike by the Bank of Korea to the end of 2020 vs. the prior outlook of the end for this year.  Australian building approvals slumped by c. 1/3 during November m/m.  Germany’s trade balance was larger than expected due to an unexpected decline in imports.  All figures posted below.

The commodity markets continue to see the cyclical commodities rally on the trade optimism.  WTI has regained the $50 level and Brent has traded with a $60 handle at times this morning.

Important Snippets

• Chinese auto and appliance manufacturers revved higher with the government pledging support for both groups.  This follows the disappointing outlook from Geely Auto +8.4%.   Underscoring concerns for the sector and after the local close, data showed Chinese passenger car sales fell 6% last year.
• In a landmark decision, a S. Korean court has ordered assets of NSSMC +1.0% to be seized over a dispute regarding compensation for those into forced labor during WWII.
• Daimler’s +4.8% incoming CEO, Ola Kallenius sees the company posting record sales this year.
• In addition to the Brexit news flagged above, U.K. builders are also being bolstered by Taylor Wimpey +6.6%.   The company sees FY ’19 inline with FY ’18 which is better than feared.
• Lennar, JC Penny and Constellation Brands have results this morning.
• The Nikkei says Apple has asked suppliers to but “newest iPhone” output by 10% this quarter.  However, that may be better than feared of late.
• Fitch issued warning on U.S. debt rating and Fed Minutes due this afternoon.

Markets and Macro