Daily Market View

U.S stocks closed at their lowest level since April, with Treasuries rising alongside the yen, as mounting concern over the health of the global economy overshadowed positive trade developments and signs of strength from the American consumer. The S&P 500 Index tumbled 1.9 percent Friday, after testing February lows, erasing the week’s gains. Health-care and technology stocks were among the biggest decliners. The Dow Jones Industrial Average sank almost 500 points, led by Johnson & Johnson’s biggest rout in years amid mounting legal peril. Retailers retreated even after monthly data indicated U.S. consumers are still spending. Oil and gold fell. The sour mood on Wall Street came after equities slumped from Asia to Europe on concern that Chinese growth is slowing. President Donald Trump attributed the latest data to his trade war, even suggesting a deal could come soon. Investors took little solace in that, and earlier signs that trade tension was easing didn’t do much to calm nerves. The Federal Reserve holds its final policy meeting of 2018 on Tuesday and Wednesday.

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The Dow fell sharply on Friday, ending the week on a bleak note and sending the index into correction territory after a batch of weaker-than-expected economic data out of China and Europe sparked fresh worries about the state of the world’s second-biggest economy and prospects for global growth. The Dow fell 496.87 points, or 2%, for its lowest close since May 3. The drop left the Dow more than 10% below its Oct. 3 record high, meeting the widely used definition of a correction. The blue-chip gauge joined the S&P 500 and the NASDAQ in correction territory. Fresh evidence that global trade tensions are hitting the world’s second-biggest economy emerged Friday.

NASDAQ 100

The tech heavy NASDAQ dropped 58.59 points, or 0.8%, marking its lowest close since Nov. 20. Shares of Costco Wholesale Corp. fell 8.6%, after a Thursday evening earnings release showed the retailer missed revenue expectations for the fiscal first quarter. Adobe Inc. stock fell more than 7%, after the software company missed earnings expectations for the fourth quarter. Retail sales rose 0.2% in November from the month previous, surpassing expectations of a 0.1% jump.

Oil

Oil traders will stay fixated on global growth prospects in the week ahead, after prices got hammered last week by worries that the ongoing U.S-China trade dispute will drag on global growth and, by extension, erode energy demand. West Texas Intermediate crude tumbled $1.38, or roughly 2.6%, on Friday to settle at $51.20 a barrel by close of trade on the New York Mercantile Exchange. For the week, WTI prices lost about 2.7%. With just about two weeks to the end of 2018, WTI remains down about 15% on the year and some 32% lower from four-year highs of nearly $77 per barrel hit in early October. Brent is down about 10% on the year and nearly 32% lower from four-year highs of nearly $87 per barrel hit two months ago. Fresh weekly data on U.S. commercial crude inventories to gauge the strength of demand in the world’s largest oil consumer and whether output levels will continue to rise will capture the market’s attention this week.

Gold eased for the second straight session to hit a one-week low on Friday as the dollar rose, putting the metal on track to post its biggest weekly fall in five ahead of the U.S Federal Reserve’s interest rate decision next week. Spot gold was 0.3 percent lower at $1,238.29 per ounce. Earlier in the session, prices hit their lowest since Dec. 6 at $1,236.80. The metal is down about 0.8 percent so far this week. U.S. gold futures were down 0.4 percent at $1,242.20 per ounce. The dollar gained as investors turned nervous about an economic slowdown in China and was further supported by weakness in the euro and pound. A firm dollar makes gold more expensive for holders of other currencies. It seems to be a broader market sentiment as there is a drop across the precious complex. The dollar has strengthened and that’s being reflected in gold’s downward movement. Markets are awaiting the Federal Open Market Committee (FOMC) meeting on Dec. 18-19, where the U.S. central bank is widely expected to raise interest rates for the fourth time this year. The more interesting aspect would be what the indications are from the Fed for their plans for 2019 as we’ve seen a shift in market expectations on how much tightening we might see next year, so comments leading to that situation would be keenly watched. Gold has fallen around 9 percent since April, hit by rising U.S. interest rates and as investors chose the dollar as a safe haven rather than gold amid the U.S.-China trade dispute. Bullion is also on track to post an annual decline of about 5 percent, after rising for the previous two years. However, analysts are more optimistic on gold in 2019. Among other precious metals, spot palladium eased 1.2 percent to $1,245.30 per ounce, having hit an all-time high of $1,269.25 in the previous session. The metal was on track for its third week of gains, with prices up about 1.2 percent so far. Silver fell 1.1 percent to $14.60 per ounce.

Traditional Agricultures

Soybean futures fell on Friday for a second session as traders reacted to smaller-than-expected purchases this week by China coupled with ballooning global supplies. Corn futures firmed on prospects for China to start buying U.S supplies of the yellow grain, while wheat declined from a two-month high.

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