Daily Market Review – 31.12.2018

DeutscheBank yesterday summed up the year in one word: recession, with 93% of all assets falling year on year; that’s compared to 84% in 1920. The Dow Jones had its worst performance since the depression, and the world’s rich lost over a half trillion dollars.

Asia

Overnight Chinese PMIs show a continuing weakness in manufacturing, with another ½ point drop in December but an equal growth in the non-manufacturing sector – good news or bad, depending on your point of view. The 6/10 point drop however, places the manufacturing sector in contractionary territory for the first time in 2 years. In Japan data was unimpressive, with CPIs marginally down and unemployment up a 1/10 to2.5%. Retail trade also fell to 1.4% – half the month before, and of all the Asian indexes overnight, the Nikkei was the only one to fail in posting an increase. The Hang Seng was up this morning a percent and a 1/3 on hopes that China and the US may work out some kind of deal.

Europe

With Europe on vacation, data continues to be thin. We have a drop in Switzerland’s leading indicator and red across the board with Spanish CPIs and GDPs. Import prices and CPIs in German also declined by a percent in November, but mortgage approvals were up in the UK. Equities were on the rise as last week closed, thanks to the upwind from across the seas. Again, the FTSE led the pack with a 2.3% rise. UK cabinet members told the Observer yesterday that if Theresa May’s Brexit agreement fails to pass parliament, they will delay the March deadline to July rather than risk a no-deal divorce. At this point, members on both sides of the divide are seriously considering a second referendum.

US

Pending home sales fell by 7.7% in November compared to 6.7 the month before, and jobless claims fell but not as much as hoped. Index futures are showing optimism despite Friday’s closing in the red. The Asian session opened with a 200-point bull gap along the Dow Jones, but it’s been relatively flat since.

Commodities

Oil continues upwards despite Friday’s miniscule EIA drawdown and a 2-rig uptick in the Baker-Hughes rig count. Support has shifted from 42 to 44 and we’re currently trading sideways in the $5 region. Gold on the other hand just may be running into resistance along its 2-month uptrend. It failed to break through 12-84 twice over the weekend and fell below 12-80 before the Asian session helped prop it back up.

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