Daily Market View
Wednesday, December 05, 2018
| U.S Stock Market
U.S stocks plunged, with the Dow Jones Industrial Average tumbling almost 800 points, as a litany of concerns wiped out the rally in risk assets. Trade-sensitive shares sank as angst mounted that the U.S and China made no meaningful progress on the trade front this weekend. Financial shares got hammered as the yield curve continued to flatten, with the latest nudge from a hawkish comment by a Federal Reserve official. Losses accelerated and trading volumes in S&P 500 futures spiked after contracts for broke below their 200-day moving average. Adding to the risk aversion was news that U.K. Prime Minister Theresa May’s push to avoid a so-called “hard Brexit” may be at risk. President Donald Trump suggested Tuesday that he could extend a 90-day truce in his trade war with China, while his top White House economic adviser backtracked from the president’s announcement that Beijing had agreed to reduce tariffs on U.S.-made cars. Traders are even starting to bet that the Fed will cut interest rates as soon as 2020.
|Major Economic Releases for Today|
|Nikkei Japan PMI Services||00:30||52.4|
|Australia Gross Domestic Product (YoY)||00:30||3.3%||3.4%|
|Caixin China PMI Services||01:45||50.8||50.8|
|Euro-Zone Retail Sales (YoY)||10:00||2.0%||0.8%|
|U.S MBA Mortgage Applications||12:00||5.5%|
|U.S ADP Employment Change||13:15||195k||227k|
|Bank of Canada Rate Decision||15:00||1.75%||1.75%|
|U.S ISM Non-Manufacturing/Services Composite||15:00||59||60.3|
|DOE U.S Crude Oil Inventories||15:30||3577k|
|Dow Jones Industrial Average
The Dow Jones Industrial Average declined 3.10%. The best performers of the session on the Dow Jones Industrial Average were Procter & Gamble Company, which fell 0.01% or 0.01 points to trade at 93.31 at the close. Meanwhile, Verizon Communications Inc. fell 0.12% or 0.07 points to end at 58.09 and Johnson & Johnson was down 0.12% or 0.18 points to 146.03 in late trade. The worst performers of the session were Caterpillar Inc., which fell 6.93% or 9.63 points to trade at 129.32 at the close. Boeing Co declined 4.85% or 17.46 points to end at 342.50 and Intel Corporation was down 4.75% or 2.38 points to 47.75.
The NASDAQ index lost 3.80%. The top performers on the NASDAQ Composite were Pernix Therapeutics Holdings Inc. which rose 41.63% to 0.575, American Electric Technologies Inc. which was up 37.96% to settle at 1.490 and Novelion Therapeutics Inc. which gained 32.65% to close at 1.300. The worst performers were Determine Inc. which was down 25.04% to 0.494 in late trade, ConforMIS Inc. which lost 22.46% to settle at 0.56 and Smaaash Entertainment Inc. which was down 19.64% to 2.67 at the close.
Oil prices pared gains in a volatile trade yesterday as fears flared that demand would stall due to a trade war between the U.S and China, and as Russia remained a stumbling block to a deal to cut global crude supply. U.S President made clear he would revert to tariffs on China if the two sides could not resolve their differences. The comments put a damper on market enthusiasm that drove oil about 4 percent higher on Monday after Trump and Chinese counterpart Xi Jinping agreed at a meeting of the Group of 20 industrialized nations to pause an escalating trade dispute. In Monday’s session, expectations of a production cut by the OPEC and its allies, when they meet on Thursday and Friday in Vienna, had also supported prices. OPEC and its allies are working towards a deal to reduce oil output by at least 1.3 million barrels per day, four sources said yesterday, adding that Russia’s resistance to a significant production cut was so far the main stumbling block.
|Precious and Base Metals
Gold rose to its highest in more than five weeks yesterday as the dollar sagged after the United States and China agreed a 90-day pause on fresh trade tariffs, while palladium hit a record high, leaving it about $4 short of parity with bullion. Palladium rose more than 2 percent to $1,231.50 per ounce, after scaling an all-time high of $1,235. The market is structurally in a significant deficit, so there are clearly concerns about that. We’ve got a lot momentum and positive investor sentiment flowing into the market at the moment. The metal, used mainly used in emissions-reducing auto catalysts for vehicles, has gained about 48 percent since mid-August, but not all analysts think the price is justified. The high price premium on palladium is not justified in our opinion because car sales have been fairly weak on all key markets of late. U.S. tariffs have been threatened on imports of cars and car parts from the European Union. Meanwhile, spot gold rose for the second straight session, up 0.6 percent at $1,238.90. Prices touched $1,241.10 earlier in the session, their highest since Oct. 26. U.S. gold futures were up 0.4 percent at $1,244.70 per ounce. The dollar weakened against its major peers, pressured by a thaw in trade tensions between Washington and Beijing, making gold cheaper for holders of other currencies. Primarily it is the weaker dollar that is providing assistance and that will be the key driver in the short term. However, it is going to find it difficult to sustain the current rally unless there is even more dollar weakness, simply because the overall investor sentiment for riskier assets has improved and that would prove to be a drag in the short term. The temporary freeze on further hostilities in the trade war sparked a global rally in equity markets on Monday. Global trade tensions over the past few months have seen investors opt for the safety of the U.S currency rather than bullion, a traditional safe haven asset. Among other precious metals, spot silver rose 1 percent to $14.52 per ounce.
Soybeans were little changed yesterday as dealers awaited concrete indications that China will resume its huge imports of U.S soy halted by the trade war between the two countries. Corn and wheat are being undermined by the lack of strength in soybeans.
|Futures Settlement Price Tuesday, December 04, 2018|
|S & P 500||SPM18||2789.75||2790.25||2697||2701.75||-89.25|
|Daily Swings (The Pivot Levels)|
Source: – News & Quotes (Courtesy: Reuters)
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