Daily Digest: Monday 2nd December
Equity Overview
Monday marked the first full trading session of December across major markets. This week’s macroeconomic focus is on Friday’s US Non-Farm Payroll data print, with traders also watching over a number of public appearances from high impact central bank officials.
The UK’s final manufacturing PMI print for November came in at 48, against early analyst estimates of 48.6. Whilst a decline in manufacturing output is to be expected, data indicates that output declines are occurring at a faster than anticipated pace. What does this mean for GDP? Well due to the size of the UK’s manufacturing sector, downward changes at a core level are virtually insignificant in terms of wider economic performance. According to a Lloyds survey, manufacturing accounts for just under ¼ of GDP, while tertiary output accounts for over 70% of GDP. However, in order to shelter GDP and offset negative change, construction and service PMI should be expected to rise above the 50-level indicating expansion.
Due to relative significance, the print was somewhat overshadowed by Nationwide’s house price index for November. Data showed that during the month, the average listing price of UK properties rose by 1.2%, while annual price growth rose to 3.7%. November marks the fastest acceleration in monthly house prices recorded this year, with total values edging toward record highs. This could prove problematic for some equities across the property sector as market activity slows ahead of next Spring’s stamp duty hikes.
On a whole, the reaction of UK equities toward data throughout the session was positive, with the nation’s benchmark index, the FTSE 100 (FTSE) rising 25.59 points (0.31%) to 8,312.89.
On the continent, sentiment loosely mirrored the UK, as the Pan-European STOXX 600 (STOXX) rallied 3.36 points (0.66%) to 512.61, boosting investor confidence. Manufacturing PMI across the Eurozone holds a similar weight and significant to the UK’s, with November figures falling in line with expectations at 45.2. Ultimately, both the speed and direction of output changes allude to a far greater economic trend marked by domestic industrial declines and an increase in manufacturing import and outsourcing.
On an equity basis, US traders emerged as the session’s big winners as both the Nasdaq 100 and S&P 500 major indexes tracked higher. The Nasdaq 100 ($NDX) rose 234.23 points (1.12%) to 21,164.60, while the S&P 500 ($SPX) rose 14.77 points (0.24%) to 6,047.15. The Dow ($INDU) seemed to be the only anomaly amongst the three major indexes, as selling pressure pushed values down 128.65 points (0.29%) to a close at 44,782. In terms of manufacturing PMI, US figures for November came in at 48.4 against expectation of 47.7. This shows that while the directional trend expected by analysts was correct, the speed of change through November was slower than anticipated.
What to Watch Tomorrow
JOLTS Job Openings
Swiss CPI
Sources:
https://uk.finance.yahoo.com/world-indices/
https://uk.finance.yahoo.com/commodities
https://www.londonstockexchange.com/indices/ftse-100
https://www.binance.com/en-GB/price/bitcoin
https://www.binance.com/en-GB/price/ethereum
https://qontigo.com/index/sxxp/
Stock Market Activity Today & Latest Stock Market Trends | Nasdaq
https://coinmarketcap.com/charts/#market-cap
https://www.forexfactory.com
Definitions:
YoY - Year on Year, or, Year over Year
MoM - Month on Month, or, Month over Month
QoQ - Quarter on Quarter, or, Quarter over Quarter
ECB - European Central Bank
BOJ - Bank of Japan
Fed - Federal Reserve
BOE - Bank of England
SNB - Swiss National Bank
DOJ - Department of Justice
SEC - Securities & Exchange Commission