Asia
Markets in Asia-Pacific chose to focus on US-China relations as the clock ticks down to the G20 Summit, rather than a big bounce on Wall Street overnight.
Headlines swing from optimism of a “ceasefire” at the Summit to the negative expectations that the meeting will fail to address the intractable issues of the trade dispute.
The Shanghai Composite Index suffered from a late slide in the trading session, ending down 1.32% on the day to 2,567 points. Despite volatility this month, the index is close to ending November at the same levels as at the start.
Hong Kong’s Hang Seng tracked a similar trajectory during the day. But the index has had a better month than its Chinese equivalents, showing a gain of around 2,000 points so far in November to above 26,500.
Europe
US markets’ rebound on Wednesday helped improve the recently skittish mood in Europe, although gains were mostly below 1% on the day for major indices. The FTSE 100 moved further away from 7,000 with a gain of around 40 points.
The pound is now back where it started before the Bank of England revealed its extreme scenarios for a no-deal Brexit. Under the “worst-case scenario”, sterling would lose 25% , house prices would slump and the economy would decline by the fastest rate since the Great Depression.
Thomas Cook (TCG) revealed a £163 million loss but the damage to the share price has already been done by the profit warning at the start of the week and the suspension of the full-year dividend.
North America
The 600-point rise in the Dow Jones yesterday, spurred by Jerome Powell’s more doveish comments in New York, brought the index back above 25,000 points. Substantial gains were seen on the S&P 500 and Nasdaq on Wednesday.
There are two trains on thought: that this change of tack from the Fed could spark a year-end rally in the US after a troubled year, or that yesterday’s move is just the symptom of the strong volatility seen in recent months.
The Federal Reserve is still expected to make its fourth rate rise this year at the end of December but the idea that rates may be approaching “neutral” levels puts 2019’s monetary moves into question.
Powell has been backed into a corner by the President in recent months, so any hawkish line taken yesterday would have likely provoked more criticism from Trump.
Fed minutes are due today for the last meeting.
PCE data and Federal Reserve minutes are due today.
In Canada, GDP data will be in view on Friday.
Also in Canada, Toronto Dominion Bank (TD) is one of the biggest companies in North America to report today.
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