Oil – private survey of inventories shows a surprise build in headline crude stocks
Archives of “December 2019” month
rssLevel of indebtedness of the S&P 500 companies.
US Indices post a 2-day losing streak
Another soggy close as gains cannot be sustained
The major US stock indices sagged into the close for the 2nd consecutive day as markets await Dec 15 tariff date (will the US add tariffs or postpone them and what will the China response be), FOMC and ECB decisions on Wednesday and Thursday respectively. The ECB meeting and press conference will be the first for Christine Lagarde.
The USMCA deal today did little to move the needle.
The final numbers are showing:
- S&P index, -3.44 points or -0.11% to 3132.52. The high reached 3142.12. The low extended to 3126.09
- NASDAQ index fell -5.643 points or -0.07% to 8616.18. The high reached 8650.762. The low extended to 8600.816
- Dow Jones industrial average fell -27.88 points or -0.10% to 27881.73. The high reached 27949.02. The low extended to 27804.00.
Thought For A DAY
EIA lowers US 2020 crude production estimate to 13.18 mbpd from 13.29 mbpd prior
EIA lowers 2020 supply outlook after OPEC
- Sees supply for 2020 at 102.29 mbpd vs 102.58 mbpd prior
- Demand seen at 102.14 mbpd vs 102.27 mbpd prior
- EIA forecasts OPEC crude oil production will average 29.3 million b/d in 2020, down by 0.5 million b/d from 2019
- Latest report
The swing producer in the world is now shale. In this report, the EIA said it expects total US crude oil and petroleum net exports to average 570,000 bpd in 2020 but that’s down from 750,000 bpd in last month’s estimate.
They continue to see a rise of 0.9 mbpd in US production this year, that’s slower than the 1.3 mbpd rise this year but still above private forecasts, which have fallen to 0.6 mbpd (and lower).
The tangible book value of the S&P 500 companies has been significantly reduced since 2014.
European equity close: Modest losses but France and Italy buck the trend
Closing changes for the main European bourses:
- UK FTSE -0.2%
- German DAX -0.3%
- French CAC +0.1%
- Italy MIB +0.7%
- Spain IBEX -0.1%
The euro is up 0.25% so far today after it found a bid into the London fix.
Nikkei 225 closes lower by 0.09% at 23,410.19
The Nikkei is barely changed as markets stay tepid to start the week
It has been a quiet session for Asian stocks as markets are staying more cautious and reserved today in anticipation of key risk events still to follow later in the week.
The Hang Seng and Shanghai Composite are also trading at flat levels currently with little change observed in US futures and bond yields as well to start the day.
The overall risk mood is more flat after some bit-part losses seen in equities overnight as traders and investors are keeping their focus on key central bank meetings, the UK election and US-China trade developments still.
As such, USD/JPY is mired in a 11 pips range holding at 108.63 currently. The rest of the major currencies bloc is also little changed as trading ranges remain narrow.
China should not attach too much significance to 6% growth rate, says government economist
The debate on China’s economic target for next year continues
In an article published in the People’s Daily, a deputy director at the DRC – an advisory body to the state council – Wang Yiming says that “6% is not a special watershed”.
Adding that “the growth rate, may it be higher or lower, is not the main problem”. But instead “the key is the quality and efficiency of growth”.
Take this with a pinch of salt for now but if we start to see more commentary such as this next year, it could be a sign that China may just finally let up on the 6% level – however the calculations to reach that figure may be.
As things stand, China has a bigger issue at hand with bond defaults starting to be on the rise. The latest news today is that a local government unit barely managed to escape that with a late payment, which otherwise would have added another scare to markets.
I alluded to another case last month here. And I would expect more such cases to crop up in 2020 and that will surely add to more worries surrounding the Chinese economy over the next few years.
An interesting stat to start the week is that the value of China dollar bonds with yields above 15% have jumped up to $25.6 billion as of today. It was only $21.5 billion last week.
That’s almost a 20% jump as the bond market starts to sense some fear – which will add to funding burden for businesses in the country, and the feedback loop continues.
Economic data coming up in the European session
A couple of light data points to move things along
Good day, everyone! Hope you’re all doing well as we look to get things going in the session ahead. Markets are still keeping steady for the most part as we continue to count down to the big risk events yet to come later on in the week.
There has been plenty of hoo-ha since overnight trading over the USMCA deal but I would expect any market reaction on an official announcement to be modest given how this has been in the works for quite some time already now.
Looking ahead, there isn’t much else to shift the dial in markets as we continue to look towards key central bank meetings, the UK election and US-China trade news.
0745 GMT – France October industrial, manufacturing production data
Prior release can be found here. General indication of French factory activity to start Q4. Not a major release by any means.
0930 GMT – UK October monthly GDP data
0930 GMT – UK October manufacturing, industrial, construction output
Prior release can be found here. All the focus remains on the UK election for the pound so the data here will have minimal impact. In any case, it should just reaffirm flat/sluggish economic conditions in the UK to start the final quarter of the year.
0930 GMT – UK October trade balance data
Prior report can be found here. A general indication of trade conditions in the UK economy. A minor data point.
1000 GMT – Germany December ZEW survey current conditions, expectations
Prior release can be found here. Economic sentiment is expected to improve – in-line with other survey data – as the outlook for the German economy is seen to be less gloomy. That said, any signs of a solid recovery is still far away and there are still plenty of challenges that remain as we look towards next year. For now, hope springs eternal.
1100 GMT – US November NFIB small business optimism index
Prior release can be found here. This is an index which measures the opinion of small businesses on the economic conditions in the country. A minor data point.
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading!