Asia
The trade truce rally proved to be shortlived on Tuesday after a strong start on Wall Street petered out as doubts started to creep in. Despite a number of tweets from President Trump on specific sectors, namely farming, the lack of detail on trade from either side has started to trouble investors.
Nevertheless, Chinese and Hong Kong shares nudged higher, helped by a recovery in the Chinese yuan.
Japan’s Nikkei suffered a significant one-day slump of over 2% or 500 points to just above 22,000 points. Japan has been one of the more resilient markets during this year’s volatility. The Nikkei regained its early year high above 24,000 points in October before the global slump took the index to the low 21,000 level. The USD-JPY exchange rate has remained between 110 and 115 yen since July and today a drop from 113.5 to 112.7 weakened the case for Japanese equities.
Europe
The FTSE 100 made reasonable progress at the start of the day but lost ground as the morning moved on. The index is now off 20 points at 7,041, erasing some of yesterday’s gains.
A rebound in sterling took the edge of UK equities after the EU’s chief lawyer said that the UK could revoke Article 50 unilaterally. Bank of England senior staff, including Governor Mark Carney, were up before the Treasury select committee today to discuss last week’s controversial “scenarios”, which included a plunge in sterling and house prices.
A better-than-expected reading of the construction PMI also helped sterling’s cause.
European exchanges were off by less than 1% across the board.
North America
US markets have made the best start to December since 2010 but the trading break on Wednesday in honour of George HW Bush will make for a truncated week.
The non-farm payroll figures, due on Friday, are expected to show a rise of just under 200,000 jobs in November, lower than the previous month. A provisional reading of December’s University of Michigan sentiment index is due on Friday.
This week sees the release of manufacturing data in Canada and the US. Canada’s central bank is expected to keep interest rates on hold at 1.75% on Wednesday, while Federal Reserve chairman Jerome Powell testifies before the Joint Economic Committee in Congress on the same day.
In Canada, more banks report earnings this week.
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