Sean Burgess | PraxisIFM Asset Manager and Co-Founder Emirates HR
US EQUITY MARKETS FINISH LOWER
With the major indices down more than 4 percent for the week, as investors absorbed a wave of negative news, including a weak November jobs report and the inversion of the Treasury yield curve. The optimism on Monday from positive US-China trade negotiations over the weekend was lost by Thursday, after Canada arrested the CFO of Chinese telecom giant Huawei – on orders from the US.
US TREASURY YIELD CURVE PARTIALLY INVERTS
For the first time since the financial crisis, as yields on the two- and three-year notes rose above the five-year note, whilst the spread between the two- and ten- year was the closest since 2007. A yield curve inversion has proceeded the last seven US economic recessions, with the last event taking place in August 2005, just over two-years before the global recession and financial crisis.
EUROPEAN MARKETS FINISH AT 2-YEAR LOW
After the pan-European Stoxx 600 index lost 3.3 percent over the week on continued global trade concerns as a potential US-Sino truce appears to have collapsed. Germany’s DAX index officially fell into bear market territory after closing over 20 percent lower from its January high, as the country’s automotive-heavy economy sees renewed barriers on exports to its two largest markets.
JAPAN’S Q3 GROWTH REDUCED FURTHER
With a group of economists suggesting that the economy contracted by 1.9 percent over the quarter compared to the government’s initial 1.2 percent estimate. Whilst Q4 growth is likely to demonstrate a strong bounce-back, the economists are forecasting weak growth over 2019 as the export-dependent economy is starting to show the damage caused by the US-China led trade dispute.
OIL PRICES RISE AFTER OPEC AGREEMENT
With the two-day meeting in Vienna ending with an agreed 1.2 million barrel a day cut to global production. 800,000 barrels will be cut from OPEC members, mainly the de facto leader Saudi Arabia, whilst the remaining 400,000 barrels will be taken from non-OPEC members, predominantly Russia. Oil producers are aiming to increase Brent crude to $80 a barrel – it closed Friday at $62.
In other financial news:
- FTSE 100 down on Brexit concerns, with the index losing 3 percent for the week as investors wait on the UK parliamentary vote to approve the EU’s withdrawal deal.
- US economy adds 155,000 jobs in November, driven by growth in healthcare, manufacturing and manufacturing, whilst the unemployment remained at 3.7 percent.
- South African shares rise on economic growth, with the FTSE/JSE All Share Index up 0.7 percent after third quarter growth hit an annualised rate of 2.2 percent.