Daily market review

United States

Cyclical/value stocks were flat to weaker Monday as they consolidated last week's gains while growth/mega-caps held up better. The Dow Jones industrial index fell 0.5 percent, the S&P 500 eased 0.2 percent, while the NASDAQ 100 firmed 0.5 percent.

The reopening trade lost momentum as attention focused on weekend pandemic coverage and the prospect of restrictions on business activity across many states. Lack of resolution in long-delayed US fiscal talks added to lack of conviction Monday.

Energy and financials led the way lower after last week's advance while utilities, communications services, and technology outperformed. Apple, up 1.2 percent, led technology higher, while Netflix, up 3.5 percent, and Facebook, up 2.1 percent, lifted communications services. Energy stocks suffered as crude oil prices retreated on soft demand linked to virus effects.

Among companies in focus, Boeing rose 2.3 percent and Lyft rose 1.0 percent on analyst upgrades. On the downside, Intel fell 3.4 percent on news Apple will introduce competitive microprocessors. Teladoc, the online health care provider, fell 3.1 percent after an analyst downgrade.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 33 cents to US$48.68 while spot gold rose US$26.31 to US$1,862.51. The US dollar was slightly better against major currencies. The US Treasury 30-year bond yield fell 5 basis points to 1.69 percent while the 10-year note fell 4 basis points to 0.93 percent.


US-China disputes and Brexit uncertainty dampened risk appetite Monday, though sterling weakness on the prospect of no Brexit deal helped the export-oriented FTSE-100 outperform. The Europe-wide STOXX 600 eased 0.3 percent, the German DAX was down 0.2 percent, the French CAC declined 0.6 percent, and the UK FTSE-100 rose 0.1 percent.

News that the US would impose sanctions on more Chinese officials over their Hong Kong crackdown weighed on markets, along with concern over prolonged Brexit talks which are expected to wrap up this week. Markets on balance see a last-minute deal, but concern over the prospect of no deal has risen.

Among sectors in the STOXX 600, outperforming were chemicals, technology, health care, and telecom. Lagging were banks, retail, autos & parts, insurance, media, and travel & leisure.

Among companies in focus, Pandora, the Danish jeweler, rose 3 percent on a strong trading update for November. On the downside, Lufthansa fell 0.8 percent on news of a new round of layoffs. Ted Baker, the UK luxury fashion chain, fell 1 percent on an earnings miss that reflected drastic discounting as demand dropped during the pandemic.

In economic news, German industrial production extended its recovery in October with a 3.2 percent increase versus September. This was the sixth rise in as many months, and was more than four times the market consensus.

Asia Pacific

Most major Asian markets closed lower Monday, despite gains on Wall Street Friday and strong Chinese trade data. Among the factors that appeared to weigh on regional investor sentiment were concerns about the outcome of Brexit talks and reports that US authorities are set to impose sanctions on Chinese officials involved with recent measures taken against Hong Kong legislators.

Hong Kong's Hang Seng index fell 1.2 percent, the Shanghai Composite index dropped 0.8 percent, and Japan's Nikkei and Topix indices closed down 0.8 percent and 0.9 percent respectively. Australia's All Ordinaries index outperformed with an increase of 0.6 percent, with shares of major mining companies boosted by a surge in global iron ore prices.

China's trade surplus in US dollar terms widened from $58.44 billion in October to $75.42 billion in November. This is the biggest monthly trade surplus on record and well above the consensus forecast for a surplus of $53 billion. Exports rose 21.1 percent on the year in November, strengthening from an increase of 11.4 percent in October and stronger than the consensus for growth of 11.8 percent. Imports rose 4.5 percent on the year, little changed from an increase of 4.7 percent previously and below expectations for a 6.3 percent increase.

Looking ahead*

On Tuesday in Asia/Pacific, Japanese household spending, Japanese GDP, and Australian residential property prices are due. In Europe, Swiss unemployment, French merchandise trade, Eurozone GDP, and German ZEW reports are scheduled. In North America, Canadian housing starts, US NFIB small business optimism, and US productivity and cost reports are on tap.

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