Investors and markets show sickly signs worldwide

Share Markets:

The US stockmarket managed to avert some of the losses seen in Asian and European markets, although investor sentiment in the US remained subdued.

The Dow fell 0.1%, while the S&P 500 edged up 0.1% and the Nasdaq rose 0.2%. Earlier, the Chinese stockmarket had a weak session, with the Shanghai Composite down 5.5%.

It is a big week for financial markets this week, with the RBA meeting (tomorrow), the European Central Bank meeting, Fed Chair Yellen's testimony to Congress and the release of the final payrolls number before the Fed's December meeting.

Interest Rates:

US government bond yields fell on Friday night as earlier weakness in stocks (led by the Chinese market) encouraged safe haven flows into US government bonds.

Australian government bond yields rose on Friday and bond yields (implied by futures), continued to edge higher on Friday night, defying the tone set in Europe and the US.

Foreign Exchange:

The US dollar index (against a basket of currencies) rose on safe haven flows.

The Euro weakened, with slightly stronger European economic data having little impact on expectations the European Central Bank is likely to increase monetary stimulus this week.

EUR/USD rose to 1.0638 on Friday, but retraced its gains to trade around 1.0591 at the time of writing.

Sterling also weakened against the US dollar, with GBP/USD falling from a high of 1.5110 to currently trade around 1.5038.

Even the Yen was not immune to US dollar strength on Friday night, with USD/JPY rising from a low of 122.31 to trade at 122.82 at the time of writing.

The Australian dollar firmed against the US dollar on Friday, rising to a high of 0.7240, however, it lost ground on Friday night, to currently trade around 0.7193.

Commodities:

The price of Australia's largest export, iron ore remained weak, at US$44.50 per metric tonne. The copper price also fell on speculation of waning demand from China.

Australia:

There was no economic data released locally on Friday. Today we have the release of company profits and inventories data, which are inputs into Wednesday's GDP figures.

China:

Industrial profits declined 4.6% in the year to October, down from -0.1% in the year to September, reflecting the ongoing struggles within the industrial sector.

Europe:

Eurozone economic confidence held at 106.1 in November. This is the highest level since May 2011 and slightly better than expected.

Japan:

The jobless rate fell from 3.4% in September to 3.1% in October, the lowest since 1995.

However, despite the tightening labour market, household spending fell 2.4%.

The weakness in economic activity will support continue to the case for additional stimulus. On a positive note for the Bank of Japan, national CPI was stronger than expected and turned positive, lifting 0.3% in the year to October (expectations at 0.2%).

However, core inflation (excluding fresh food) remained in contraction (-0.1%) and excluding fresh food and energy, inflation was at an annual pace of 0.7%. Both headline and core inflation remains far from the BOJ's 2% target. 

United Kingdom:

UK GDP rose 0.5% in Q3, which was in line with consensus expectations, driven by domestic demand.

Private consumption was up 0.8% for the quarter and investment was up 1.3%. Imports, however, were stronger than expected, so that net exports provided a significant detraction to GDP.

For the year to Q3, GDP rose 2.3%, the same pace as the previous quarter.

Nationwide house prices rose by a smaller than expected 0.1% in November. For the year to November, house prices gained 3.7%, down from 3.9% in the year to October, according to Nationwide.
GfK consumer confidence eased to a reading of 1 in November, from 2 in October.

United States:

There was no data released in the US on Friday night.



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