Week ends on quiet note, ahead of massive fortnight

Stock indices ended the week on a dull note, as markets traded thin off the back of the Thanksgiving day holiday.

Thanksgiving holiday made for a quiet end to week

Stock indices ended the week on a dull note, as markets traded thin off the back of the Thanksgiving day holiday. Risk was taken off the table, very marginally, both across the ASX 200 and in markets abroad, in what could be described as a case of profit-taking. The weekend’s data flow proved significant, after Chinese PMI numbers surprised strongly to the upside. Crude oil prices were the major macro price mover, however, dropping nearly 5% in Friday’s session. The day ahead will be focused on local Building Approvals data today, as market participants prepare for a big few weeks in global markets.

Stocks fall Friday on a day of low activity

It was a sea of red across the stock market map on Friday, but the losses were fairly shallow. At that, they were sustained on a day of very low activity, with the benchmark S&P 500, for one, dropping -0.4%, but on volumes 53% the 30-day average. That move backed up a day in which the ASX200 also pulled back, after touching record highs mid-week last week, lead lower by declines in both the banks and miners. It ought to be another quiet, albeit marginally positive open for the ASX200 this morning, with SPI Futures indicating a 5-point jump for the index.

Trade-war headlines inspire a touch of concern

Although judging by subdued, if not slightly “risk-on” moves, in the G10 currency space early today, market commentary this morning may centre-around trade-war news. The Twittersphere became a little rattled over the weekend, on news reports from China’s Global Times that “Beijing is insisting that a rollback of tariffs must be a part of any phase one trade deal with Washington”. The matter of what to do with existing tariffs seems still a sticking-point between the US and China, as markets grow a little anxious about the prospected of trade deal – and whether December 15’s planned tariff hikes will actually be scrapped, as expected.

Chinese PMI data surprises; focus turns to EU and US PMI

Perhaps the reason for the sliver of positivity in markets this morning stems from the weekend’s release of China’s PMI numbers. Published on Saturday, the data came in substantially better than expected. The key Manufacturing PMI number, which is of greatest importance, showed an expansionary 50.2 figure, over an estimated 49.5. The numbers add credence to the notion that the slow down in business activity in the global economy that inspired widespread fears of a global recession is bottoming. In this vain, traders will shift attention to US and European PMI data out this evening, to test the idea the global economy is picking up again.

Oil prices tumbles on doubts about OPEC cuts

The major macro mover on Friday night was certainly oil prices. Brent Crude prices dropped 4.4% , while WTI prices plunged over 5%, after it was reported on Friday that OPEC+ members are hesitant to confirm further production cuts at the cartel’s upcoming meeting. The tumble in prices wiped out a major chunk of oil’s recent grind-higher, which had been underpinned by the prospected of tightening global supply, and a boost in demand from a turnaround in global economic activity. Attention will turn to OPEC’s meeting, scheduled for December 6, now, as traders await clear signals about the organisation’s plans regarding output.

Building Approvals data highlight calendar today

Of local importance today, Australian traders receive one of the last major GDP “partials” before Wednesday’s actual release of growth data, and tomorrow’s RBA meeting. Building Approvals Figures are published by the ABS, and is expected to show approvals fell be -1.0% last month. Despite the contractionary print, there’s the growing sense that the recent weakness in build approvals numbers may be improving. A beat in today’s data will also support the notion Aussie growth was a little better than previously thought last quarter, with forecasts for Wednesday’s GDP figure having been upgraded last week from 1.4% to 1.6%.

A high impact fortnight ahead

As markets enter the final calendar month of 2019, traders prepare for what promises to be a high impact two-to-three weeks. Event risk is high, and will determine the strength of the current upswing in risk assets. The data docket is dense, and tremendous focus will be on interest rate decisions next week from the ECB and US Fed. Geopolitical risk will, again, be the highest priority of all, with the UK General Election and the next round of tariff-hikes scheduled for the middle of the month. It could be a big end to an interesting year, with all the big issues coming to the fore.


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