November 9, 2018
United States:
Stocks Fall on Oil, China Concerns; Dollar Gains: Markets Wrap
U.S. equity-index futures fell for a second day as crude oil’s slide into a bear market and concerns over the health of China’s economy weighed on global stocks. The dollar continued its advance after the Federal Reserve stayed on track for a December rate hike. Mining and energy shares led a drop in Europe’s main equity gauge as most industrial metals fell, while disappointing forecasts from Richemont and Thyssenkrup AG also weighed on the index. Futures on the Dow Jones, S&P 500 and Nasdaq slipped. Oil extended a run of declines, heading for the longest losing streak on record. In Asia, financial shares performed particularly poorly following news that Beijing plans to set quotas for banks to pump credit into private companies. Treasury yields edged lower. Softer Chinese producer-price gains, weak car sales and a disappointing outlook from a top online travel company combined to reignite lingering concerns about the health of the world’s second-biggest economy. That’s capturing investor attention after a Fed rate meeting on Thursday that offered few surprises, with policymakers repeating their outlook for “further gradual” increases.
Europe:
U.K. Economy’s Best Quarter in Two Years Hides Loss of Momentum
Britain posted its fastest calendar quarter of economic growth in almost two years, but a sudden loss of momentum from August pointed to a slower pace of expansion in the run-up to Brexit. Gross domestic product increased 0.6 percent in the third quarter from the previous three months, the most since the end of 2016, the Office for National Statistics said Friday. The figure was in line with forecasts. The pickup, from 0.4 percent growth between April and June, was partly driven by household spending, suggesting a record heatwave and the soccer World Cup in the early part of the quarter played a key role. Net trade also made a significant contribution. With the Bank of England judging the economy is now operating at full capacity, policy makers are expected to raise interest rates at a gradual pace to keep inflation in check. Traders see the next increase toward the end of next year.
Asia:
China’s Nervy, Battered Stock Market Is Finally Calming Down
You know things are bad for Chinese equities if an entire week without gains can be spun positively. While stocks fell in the past five days, there was no sign of the panic we saw in October, when the threat of pledged shares plagued the market. The Shanghai Composite Index’s declines exceeded 1 percent only on Friday, following the longest stretch of muted moves since July. Car makers and casinos had a rough week, but average intraday swings for the broader market were the lowest they’ve been all quarter. We’ve been taking stock of China’s efforts to bolster this year’s worst-performing major equity benchmark and address record bond defaults. Lower volatility is a good start for investors everywhere, but additional support is expected from policy makers before we get anything that looks like a sustained rebound in China. More details on how existing measures may work (equity finance tool, anyone?) would be helpful.
