Key Data Releases and Events. Releases due today (21 December 2018)

Transcription

1 Investment Daily 21 December 2018 US stocks fell and bond yields rose amid concerns of a government shutdown European stocks fell and core government bonds rose amid risk-off market sentiment Asian equities extended losses as the Fed hiked rates for a fourth time this year Global stocks extended losses amid risk-off sentiment US equities fell for a second day on Thursday amid reduced appetite for risk after the Fed hiked interest rates on Wednesday and signalled two more hikes for next year. Heightened risk of a government shutdown also weighed on market sentiment. The S&P 500 finished the day 1.6% lower, led by technology and consumer discretionary shares. US Treasuries fell (yields rose) on government shutdown concerns after President Trump refused to sign the Senate s version of a stopgap spending bill as it doesn t include additional funds for border security. The yield curve bear steepened, with 2-year yields up 2bp at 2.67% and 10-year yields up 5bp at 2.81%. European stocks declined on Thursday, amid the global risk-off sentiment after the Fed meeting on Wednesday. The regional Euro Stoxx 50 Index shed 1.7%, led by financials and technology stocks. At the regional level, the German DAX fell 1.4%, while the UK FTSE 100 fared comparatively better, falling only 0.8% over the day. Swedish stocks underperformed, falling 2.1% over the day, led by financial stocks after the central bank unexpectedly raised interest rates. Meanwhile, core European government bonds rose (yields fell). French 10-year OAT yields fell 3bp over the day, to close at 0.67%, while equivalent-maturity German bund yields fell 1bp to 0.23%. Italian bonds outperformed in the region, with the 10-year yield falling 4bp to 2.73%; the lowest level since July. Asian equities retreated on Thursday, taking a negative lead from US markets. Japanese stocks underperformed, with the Nikkei 225 shedding 2.8%, as the Bank of Japan kept its policy and economic assessment unchanged. In China, the Shanghai Composite index closed 0.5% lower, led by financials shares. All major bourses, aside from the Shenzhen Composite, extended losses over the day. Crude oil fell on Thursday as investors weighed the impact of the Fed rate hike on economic growth and oil demand. WTI for February delivery closed 2.8% lower at USD45.9 per barrel. Key Data Releases and Events Yesterday At its December meeting, the Bank of Japan (BoJ) decided to keep its policy unchanged, maintaining short term yields at -0.1% and the 10-year JGB yield at around 0%. The BoJ, overlooking recent soft data, reiterated its view that Japan s economy is expanding moderately and is likely to continue its moderate expansion as financial conditions remain highly accommodative. The Bank of England kept rates on hold at its December meeting, as was widely expected. In its statement the Bank noted Brexit uncertainties have intensified considerably since the Committee s last meeting. Moreover, the Bank suggested the near-term outlook for global growth has softened and downside risks to growth have increased. However, these developments had to be set against strongerthan-anticipated wage growth. Overall, the Bank maintained the view that, conditioned on a smooth Brexit, a gradual and limited tightening of monetary policy remained appropriate. As expected, the Bank of Mexico increased its overnight rate by 25 bps to 8.25%. Upside risk for the forecasted inflation path had intensified, policymakers said, amid lingering government policy uncertainty and a peso slump in the fourth quarter. Cost pressures could also be exacerbated by a recent minimum wage hike, with the former staying stubbornly above the 2-4% yoy target range. The decision was unanimous and the policy rate now matches a peak reached in Releases due today (21 December 2018) Country Indicator Period Survey Prior Japan National CPI ex fresh food, energy (yoy) Nov 0.4% 0.4% UK GDP (qoq) Q3 F 0.6% 0.6%P US GDP annualised (qoq) Q3 3.5% 3.5%P US Durable goods orders (mom) Nov P 1.6% -4.3% US PCE core (yoy) Nov 1.9% 1.8% P Preliminary, F Final Japan s national core CPI (all items ex-fresh food) inflation is likely to remain stable at 1.0% yoy, while the BoJ's version of core CPI (all items ex-fresh food and energy) is also expected to be unchanged at 0.4%. The final UK Q3 GDP data is expected to confirm the preliminary reading of 0.6% qoq. The focus here will be on the detail (incomes, profits, savings, and investment). November s US durable goods report could increase 1.6% mom on the back of a jump in commercial jet orders. In the details, the ex-transportation index could rise 0.3% mom. Overall, core business 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. Past performance is not an indication of future returns

2 investments have been plateaued after climbing steadily throughout 2017 a resumption will help extend the business cycle The Fed s preferred inflation measure the annual change in US core PCE is expected to edge up 1ppt to 1.9% yoy in November. This would suggest that underlying pricing pressures remain steady despite low unemployment levels. Past performance is not an indication of future returns 21/12/2018 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 22, ,952 22, US S&P 500 Index 2, ,941 2, US NASDAQ Composite Index 6, ,133 6, Canada S&P/TSX Composite Index 14, ,586 14, Europe MSCI AC Europe (USD) Euro Stoxx 50 Index 3, ,687 2, UK FTSE 100 Index 6, ,904 6, Germany DAX Index 10, ,597 10, France CAC-40 Index 4, ,657 4, Spain IBEX 35 Index 8, ,643 8, Italy FTSE MIB Index 18, ,544 18, Asia Pacific MSCI AC Asia Pacific ex Japan (USD) Japan Nikkei-225 Stock Average 20, ,448 20, Australian Stock Exchange 200 5, ,374 5, Hong Kong Hang Seng Index 25, ,484 24, Shanghai Composite Index 2, ,587 2, Hang Seng China Enterprises Index 10, ,963 9, Taiwan TAIEX Index 9, ,270 9, Korea KOSPI Index 2, ,607 1, India SENSEX 30 Index 36, ,990 32, Indonesia Jakarta Stock Price Index 6, ,693 5, Malaysia Kuala Lumpur Composite Index 1, ,896 1, Philippines Stock Exchange PSE Index 7, ,078 6, Singapore FTSE Straits Times Index 3, ,642 2, Thailand SET Index 1, ,853 1, Latam Argentina Merval Index 29, ,462 24, Brazil Bovespa Index* 85, ,242 69, Chile IPSA Index 5, ,895 4, Colombia COLCAP Index 1, ,598 1, Mexico S&P/BMV IPC Index 41, ,121 39, EEMEA Russia MOEX Index 2, ,502 2, South Africa JSE Index 51, ,777 50, Turkey ISE 100 Index* 92, ,532 84, *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 and subject to a one-day lag. Data sourced from MSCI AC World Total Return Index, MSCI US Total Return Index, MSCI AC Europe Total Return Index, MSCI AC Asia Pacific ex Japan Total Return Index, MSCI Japan Total Return Index, MSCI Emerging Latin America 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. Past performance is not an indication of future returns 21/12/2018 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 (Hedged in 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 2017 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 US dollar) Latest Ago Ago Ago Ago 2017 High Low Developed markets EUR/USD GBP/USD CHF/USD CAD JPY AUD NZD Asia HKD CNY INR MYR KRW 1,128 1,123 1,126 1,121 1,081 1,067 1,145 1,054 TWD Latam BRL COP 3,268 3,220 3,198 3,006 2,958 2,986 3,293 2,685 MXN EEMEA RUB ZAR TRY day 1-month 3-month 1-year YTD 52-week 52-week ago Change Change Change Change High Low Commodities Latest (% ) (% ) (% ) (% ) Gold 1,260 1, ,366 1,160 Brent Oil WTI Crude Oil R/J CRB Futures Index LME Copper 6,015 6, ,348 5,773 Past performance is not an indication of future returns 21/12/2018 Investment Daily 4

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