US stocks and bond yields edged higher

Transcription

1 09 November 2017 US stocks and bond yields edged higher US stocks and bond yields ended slightly higher as investors await Senate tax proposal European auto stocks tumbled on tougher carbon emission regulations; peripheral bonds fell Most Asian equities receded on concerns about progress on US tax reforms Markets US stocks ended higher on Wednesday, as investors shrugged off some disappointing earnings and weakness in bank stocks caused by doubt about the Republican tax plan following 7 November s state elections. The Senate is expected to release its tax proposal today. Energy shares fell on lower oil prices, whereas tech and consumer staples led gains. The S&P 500 rose 0.1%. US Treasury yields edged higher in a quiet trading session despite a strong 10-year debt auction. Secretary Mnuchin acknowledged the possibility that corporate tax cuts could be delayed. The market awaits the release of the Senate's tax plan. 10-year yields rose 2bps to 2.33%. The pan-european Euro Stoxx 50 ended slightly lower (- 0.1%) on Wednesday, with gains in real estate and consumer staples offsetting losses in industrial and consumer discretionary shares. Auto stocks fell after the European Commission proposed tougher car emissions targets. At the country level, Germany s DAX and Spain s IBEX ended flat whilst Italy s FTSEMIB fell 0.6%. Elsewhere, UK s FTSE100 rose 0.2%, benefiting from a weaker sterling. Core Eurozone government bond yields were little changed yesterday amid limited regional data releases. Benchmark German 10-year bund yields closed at 0.32% (- 1bp). Meanwhile, riskier peripheral government bonds yields rose (prices fell), led by Spain. Most Asian equities fell on Wednesday as uncertainty about the progress of US tax reforms weighed on market sentiment. Moreover, Chinese trade data continued to slow down, especially exports. Energy shares were among the biggest losers as investors booked some of their profits while crude oil prices retreated during Asian trading hours. The Japanese Nikkei dropped 0.1% although the broader Topix added 0.2% to its highest close since November In China, the Shanghai Composite added 0.1% as US President Trump started his state visit in China. Crude oil prices closed lower in a volatile trading session on Wednesday, as an unexpected increase in US crude stockpiles while US production hit a record high last week outweighed platform closures in the Gulf of Mexico. WTI for December delivery slipped 0.7% to USD56.8 a barrel. Key Data Releases and Events Yesterday Chinese external trade data for October came broadly in line with expectations. Exports slowed to 6.9% yoy, down from 8.1% in September, while imports showed stronger momentum with yoy growth of 17.2% (18.6% in September). The slowdown was primarily driven by a deceleration in shipments to the US and a weaker demand for high-tech products. The trade surplus widened again after its sharp decline in September, from USD28.6bn to USD38.2bn. Releases due today (09 November 2017) Country Indicator Period Survey Prior China CPI (yoy) Oct 1.8% 1.6% Mexico CPI (yoy) Oct 6.34% 6.35% Mexico Banco de Mexico interest rate decision Nov 7.00% 7.00% Chinese CPI inflation is likely to accelerate to 1.8% yoy in October from 1.6% in September, with robust (above 2%) core inflation offsetting continued declines in food prices. PPI inflation may have moderated to 6.6% yoy from 6.9% yoy, partly explained by a higher base. The PMI for output prices declined in October, pointing to a slowing of producer price increases. This was confirmed later by high-frequency data The Mexican central bank is expected to keep its overnight policy rate unchanged at 7.00%, amid slowly decelerating inflation and lingering external risks. In September, it halted its tightening cycle for a second time This commentary provides a high level overview of the recent economic environment, and is for information purposes only. It is a marketing communication and does not constitute investment advice or a recommendation to any reader of this content to buy or sell investments nor should it be regarded as investment research. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

2 and noted that the balance of risks had deteriorated, not least in the face of ongoing NAFTA renegotiations. October CPI is also expected to be largely unchanged at 6.34% yoy (6.35% yoy previously). Pricing pressures have been easing gradually, having slowed from August s 16-year high of 6.66% yoy to 6.30% yoy in the first half of October. Policymakers expect inflation to converge towards its 3% yoy target by the end of 2018, partially as the influence from fuel price liberalisation earlier this year fades. 09/11/2017 Investment Daily 2

3 Market Snapshot 1-day 1-month 3-month 1-year YTD 52-week 52-week Fwd Close Change Change Change Change Change High Low P/E Equity Indices (% ) (% ) (% ) (% ) (% ) (X) World MSCI AC World Index (USD) North America US Dow Jones Industrial Average 23, ,602 18, US S&P 500 Index 2, ,597 2, US NASDAQ Composite Index 6, ,796 5, Canada S&P/TSX Composite Index 16, ,132 14, Europe MSCI AC Europe (USD) Euro STOXX 50 Index 3, ,709 2, UK FTSE 100 Index 7, ,599 6, Germany DAX Index* 13, ,526 10, France CAC-40 Index 5, ,536 4, Spain IBEX 35 Index 10, ,184 8, Asia Pacific MSCI AC Asia Pacific ex Japan (USD) Japan Nikkei-225 Stock Average 22, ,953 16, Australian Stock Exchange 200 6, ,043 5, Hong Kong Hang Seng Index 28, ,123 21, Shanghai Composite Index 3, ,434 3, Hang Seng China Enterprises Index 11, ,785 9, Taiwan TAIEX Index 10, ,859 8, Korea KOSPI Index 2, ,562 1, India SENSEX 30 Index 33, ,866 25, Indonesia Jakarta Stock Price Index 6, ,082 5, Malaysia Kuala Lumpur Composite Index 1, ,797 1, Philippines Stock Exchange PSE Index 8, ,605 6, Singapore FTSE Straits Times Index 3, ,423 2, Thailand SET Index 1, ,730 1, Latam Argentina Merval Index 28, ,545 15, Brazil Bovespa Index* 74, ,024 56, Chile IPSA Index 5, ,614 4, Colombia COLCAP Index 1, ,509 1, Mexico Index 48, ,772 43, EEMEA Russia MICEX Index 2, ,294 1, South Africa JSE Index 60, ,590 48, Turkey ISE 100 Index* 112, ,093 71, *Indices expressed as total returns. All others are price returns. 3-month YTD 1-year 3-year 5-year Change Change Change Change Change Equity Indices - Total Return (% ) (% ) (% ) (% ) (% ) Global equities US equities Europe equities Asia Pacific ex Japan equities Japan equities Latam equities Emerging Markets equities All total return data quoted in USD terms. Data sourced from MSCI AC World Total Return Index, MSCI USA Total Return Index, MSCI AC Europe Total Return Index, MSCI AC Asia Pacific ex Japan Total Return Index, MSCI Japan Total Return Index, MSCI Latam Total Return Index and MSCI Emerging Markets Total Return Index. Total return includes income from dividends and interest as well as appreciation or depreciation in the price of an asset over the given period. Source: Bloomberg, HSBC Global Asset Management. Data as of previous trading day s respective market close, except for BarCap GlobalAgg, BarCap US Corporate Index, BarCap Global High Yield and LME copper which are as of previous two trading days market close. 09/11/2017 Investment Daily 3

4 Market Snapshot 2 1-day 1-month 3-month 1-year YTD Close Change Change Change Change Change Bond indices - Total Return (Index Pts.) (% ) (% ) (% ) (% ) BarCap GlobalAgg (Hedged in USD) JPM EMBI Global BarCap US Corporate Index (USD) 2, BarCap Euro Corporate Index (Eur) BarCap Global High Yield (USD) Markit iboxx Asia ex-japan Bond Index (USD) Markit iboxx Asia ex-japan High-Yield Bond Index (USD) Total return includes income from dividends and interest as well as appreciation or depreciation in the price of an asset over the given period. 1-day 1-month 3-months 1-year Year End Bonds Close Ago Ago Ago Ago 2016 US Treasury yields (%) 3-month Year Year Year Year Developed market 10-year bond yields (%) Japan UK Germany France Italy Spain day 1-month 3-months 1-year Year End 52-week 52-week Currencies (vs USD) Latest Ago Ago Ago Ago 2016 High Low Developed markets EUR/USD GBP/USD CHF/USD CAD JPY AUD NZD Asia HKD CNY INR MYR KRW 1, , , , , , , , TWD Latam BRL COP 3, , , , , , , , MXN EEMEA RUB ZAR TRY Latest 1-day 1-month 3-month 1-year YTD 52-week 52-week ago Change Change Change Change High Low Commodities (% ) (% ) (% ) (% ) Gold 1,281 1, ,358 1,121 Brent Oil WTI Crude Oil R/J CRB Futures Index LME Copper 6,855 6, ,177 5,115 Source: Bloomberg, HSBC Global Asset Management. Data as of previous trading day s respective market close, except for BarCap GlobalAgg, BarCap US Corporate Index, BarCap Global High Yield and LME copper which are as of previous two trading days market close. 09/11/2017 Investment Daily 4

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