Last week the S&P500 was slightly down by 0.19% and closed the week at 3110,29 points. The index remained above the 3100 threshold while the yield on the US 10 year treasury was down 6 basis points at 1.774. The US market was once again driven by the phase-one trade deal talks but this time the Hong Kong protests were under the spotlight as a possible driver of US-China relations. The US Senate and Congress passed a piece of legislation supporting human rights and protests in Hong Kong and people close to Trump showed sympathy towards such action. This can lead to market reactions if Trump doesn’t veto the legislation and if China uses such action as an excuse to leave trade talks. “We urge the U.S. to grasp the situation, stop its wrongdoing before it’s too late, prevent this act from becoming law [and] immediately stop interfering in Hong Kong affairs and China’s internal affairs,” told Chinese foreign ministry spokesman Geng Shuang.
FOMC meeting minutes were released; dashing further hope on future rate cuts as the committee stated: “With regard to monetary policy beyond this meeting, most participants judged that the stance of policy, after a 25 basis point reduction at this meeting, would be well-calibrated to support the outlook of moderate growth, a strong labour market, and inflation near the Committee’s symmetric 2 per cent objective and likely would remain so as long as incoming information about the economy did not result in a material reassessment of the economic outlook,” noted the minutes.
The VIX still is low compared to its year-long levels, it currently stands at 12.34. The only noteworthy spiked happened on Wednesday afternoon as it touched 14.16.
Philadelphia FED Manufacturing index surprised as it was a read of 10.4 compared to the street expectation of 7.
The British Pound was nearly flat until Friday but after Friday it recorded a weekly loss of 0.63%. British equities had a slightly positive week as FTSE100 had a weekly gain of 0.31%. The FTSE 100 closed at 7326 and GBPUSD traded at 1.284. Jeremy Corbyn, leader of the Labour Party, announced his election manifesto which included a second referendum on Brexit alongside with increased fiscal spending, nationalization of sectors like railways and broadband, and an increase of the minimum wage. Markets seem to be pricing a Conservative victory for the elections that are going to be held on 12th of December any surprises might lead to market volatility.
Euro Stoxx 50 was down by 0.64%, closing on Friday at 3687. The EURUSD, on the other hand, had a weekly loss of 0.45% as it traded at 1.10. Germany released its 2019 Q3 GDP growth data, which stood at 1%. Also, German PMI surprised at 43.8 with respect to the expectations of 42.9 (still on the contractionary territory). ECB’s new president Lagarde spoke this week but her focus was not on what ECB could do but it was mainly on what the fiscal authorities should do. She voiced the fiscal spending will of ECB once again. It seems like we have to wait longer to hear about her monetary stance but it was clearly stated in her speech that any monetary action would not be as powerful as a fiscal action would be. ECB also released its minutes from the policy meeting. Headlines included: Draghi’s urge of unity on inflation aims.
Rest of the World
Nikkei 225 was down at 0.8% while USDJPY closed the week at 108.64. USDCNY traded at 7.04 back to levels close to 7. The trade talks and the Hong Kong legislation from the US also were important headlines in Asia. CSI 300 (Shenzhen Composite 300 Index) was down 0.65% at 3849.99.
One of the main EM Equity ETFs iShares MSCI EM ETF was down by 0.5% at 42.87 USD. MSCI EM Index is up by 9.75% Year to Date.
The Turkish lira was up on a weekly basis against USD by 0.58% as it stood at 5.71. Turkish Equities were relatively flat by a weekly gain of 0.11% whereas BOVESPA rallied 1.74% this week.
WTI Crude oil traded at 57.77 while Brent Crude Oil traded at 62.37. Ounce Gold was at 1462.