Morning report

Morning News Summary

Trade Hopes Flip, Markets Flip

Trade news continues to drive equities, this time reports renewing hopes of a phase one trade deal helped boost global markets as investors brushed aside Trump’s previous comments to the contrary. The US, UK and Europe all snapped recent losing streaks, while Asia extended losses.

US stocks snap three day losing streak on renewed trade hopes

US equities look set to snap a three day losing streak, with the S&P 500 (+0.7%), Dow Jones Industrial Average (+0.8%), and Nasdaq Composite (+0.5%) making significant gains amid reports that representatives from China and the US continue to work towards a phase one trade agreement, despite Trump’s recent comments suggesting he’d be happy to wait until after the 2020 election.

Shares of Alphabet added +1.9% after the company announced that Sundar Pichai, the head of the Google search and advertising business since 2015, will become CEO as founders Sergey Brin and Larry Page step away from their executive roles in the company. Expedia Group shares leapt +6.5% higher after a reshuffle of top executives, with both the company’s CEO and CFO resigning amid strategy disagreements with the board. Johnson & Johnson climbed +1.6% after it said recent tests showed Johnson’s Baby Powder was free of asbestos. Shares of L Brands rebounded by +6.0% after declining by nearly 10% in the first few days of December. Oil stocks climbed on a surge in crude oil prices, led by gains from Noble Energy (+5.5%), Devon Energy (+5.0%), Halliburton (+4.6%), and Schlumberger (+3.3%).

European and UK stocks turn around yesterday’s losses

The Stoxx Europe 600 reversed yesterday’s losses, with the index closing +1.2% higher after reports suggested that the US and China are approaching an agreement for a phase one trade deal. Having suffered major losses at the start of the week, industrials such as Trelleborg (+5.2%) and Aalberts (+3.6%) rebounded.

Increasing optimism of a Conservative Party win in next week’s general election helped calm investors, but also sent the pound to its highest level since May, weighing on multinationals. The UK’s FTSE 100 still managed to eke out a +0.4% lift. Mining stocks were among the best performers in the index, with gains from Evraz (+3.4%) and Antofagasta (+2.5%) leading the way.

Asian markets in the red

Asian markets were sent into the red after Trump’s comments suggesting he’d wait until after next November’s US election to finalise any trade deal with China. The Hang Seng (-1.2%), Nikkei 225 (-1.0%), Kospi (-0.7%) and Shanghai Composite (-0.2%) fell in response.

The ASX 200 extended recent losses by -1.6%, nearing a -4% skid in equities in the last two days on trade fears.

Crude and iron ore up, gold down

WTI crude rose +3.0% to US$57.78 and iron ore added +US$0.50 to US$90.00/MT, while gold fell -0.3% to US$1,473.22.

Today’s events

  • Ex interim div: Augusta Capital (1.625 cps), Mainfreight (25.0 cps), Ryman Healthcare (11.5 cps), Templeton Emerging Markets Investment Trust (7.60 cps)
  • Pacific Edge rights cease trading (PEBRF)
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This morning summary has been provided by Forsyth Barr Ltd and is for general information purposes only - your financial situation or goals have not been taken into account. If you would like more information or advice that is specific to you, talk to your Authorised Financial Adviser.