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Asian stocks were mostly weaker on low volumes, rounding out a third week of losses on a note of caution. The pound kept its gains following a breakthrough over the Brexit deal between the UK and EU.
Chinese equities led regional declines, with stocks also falling in Hong Kong, Malaysia and South Korea, while Australian shares outperformed. US equity futures indicated declines when trading begins in New York following the Thanksgiving break. Volumes were lower than average in most markets as the week ends with Japan and India shut for holidays, and Treasuries won’t start trading until the London open. China’s yuan slipped amid speculation policy will need to be eased further in 2019 as the economy slows.
The pound held on to gains as a draft Brexit deal for deep ties between the UK and European Union as well as a solution to the Irish border question was reached. Now it depends on whether opponents of Prime Minister Theresa May can be convinced, with markets expectations showing volatility for sterling will remain elevated.
Equities came under pressure again this week as headwinds built. Investors are questioning the growth outlook ahead of a meeting between the Chinese and US presidents next week, with hope for progress in trade talks dimming a little. There’s also a murky picture for earnings growth next year as financial conditions tighten with the Federal Reserve poised to keep raising rates.
“Fears of the trade war and slowing macro prevail,” said James Soutter, head of global equities at K2 Asset Management Ltd in Melbourne. “Investors are waiting for either a conclusion to the trade war or for Xi to present some meaningful stimulus. Chinese companies are actually more sanguine than investors, and in many cases still seeing growth, although not at the levels of last year.”
Elsewhere, West Texas oil fell below $54 a barrel as an increase in US crude inventories added to the recent bearish mood. Bitcoin declined and is on course to lose about 20% this week. Treasuries didn’t trade because of the US holiday.
Coming Up
Presidents Donald Trump and Xi Jinping plan to meet at the G-20 leaders’ meeting in Argentina next week. Federal Reserve Vice Chairman Rich Clarida speaks in New York on Tuesday and Chairman Jerome Powell addresses the New York Economic Club on Wednesday. Next Thursday sees the release of the minutes from the Federal Open Market Committee’s November meeting, while New York Fed President John Williams speaks on Friday. Powell will testify before Congressional lawmakers on December 5.These are the main moves in markets:
Stocks
Hong Kong’s Hang Seng index slipped 0.6% as of 11:23. The Shanghai Composite lost 1.4%. Australia’s S&P/ASX 200 Index added 0.4%. South Korea’s Kospi index fell 0.6%. Futures on the S&P 500 Index decreased 0.3%. Futures on the UK’s FTSE 100 Index advanced 0.3%.Currencies
The yen held at 112.94/$. The offshore yuan fell 0.1% to 6.9336/$. The Bloomberg Dollar Spot Index was little changed. The euro nudged 0.1% to $1.1414. The British pound bought $1.2876 after gaining 0.8% on Thursday.Bonds
Australia’s 10-year bond yield held at 2.66%.* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER
