Market Watch I Kristal Weekly Feed I 18th November 2019
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Kristal Weekly Feed | 18th November 2019

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In a hurry? Here’s a short summary of some major global headlines over the last week.

Positives

  • Dow closes above 28,000 – achieves first milestone in 3 months
  • Canadian energy stocks see an uptick in investors

Negatives

  • Hong Kong may be heading for first annual recession in a decade
  • US Q4 GDP growth may just be at 0.4% – NY Fed Nowcast

 

Now, for more detail.

 

Positives

1. Dow closes above 28,000 – achieves first milestone in 3 months

What You Should Know

The Dow Jones closed up by just under 223 points, or 0.8%, to close at 28,004.89. It has taken the index 90 sessions to break the 1,000-point milestone, and is the first time the index has achieved this feat since July 11.

What You Should Look Out For

The stock market’s latest upswing came after White House economic adviser Larry Kudlow said on Thursday that President Trump was happy with the way the trade negotiations were faring, even though he hasn’t signed on the dotted line yet. To be sure, the Dow closing the week on a round figure does not necessarily symbolise anything, but might contribute to investors feeling bullish in the following weeks.

Suggested Reading

 

2. Canadian energy stocks see an uptick in investors

What You Should Know

In light of rising oil prices, and easing of corporate profitability concerns, the S&P/TSX Energy Index is on its way to have a happy December. The index is positioned for its biggest monthly gain since January, and also had the first spot among sectors on the S&P/TSX Composite Index on Friday. The iShares S&P/TSX Capped Energy ETF also saw its largest inflows since June last month last week.

What You Should Look Out For

With the European Investment Bank choosing to pare down funding in fossil fuel projects, some say the oil era is slowly coming to an end. Energy stocks have been the third-worst performing stocks this year, with Canadian stocks facing the burnt of investor’s ire over the strained pipeline project. Saudi Aramco’s IPO prospectus which flagged a peak in global oil demand in the next two decades has also been one of the reasons why investors have been wary of energy stocks. But a good Q3 performance has helped companies buy back shares, raise dividends, and divest assets.

Suggested Reading

 

 

Negatives

1. Hong Kong may be heading for first annual recession in a decade

What You Should Know

The government in Hong Kong has warned citizens that prolonged unrest in the country may just lead to a national recession. A public forecast published by the government on Friday predicts that Hong Kong’s economy will contract by 1.3% in 2019, due to global factors as well as prolonged protests in the country.

What You Should Look Out For

Before the protests started, the Hong Kong’s government GDP predictions for the year rested between 2% and 3%. In August, however, the administration downgraded its forecast for the first time, and slashed its annual growth numbers between 0% and 1%.
The economy in Hong Kong has continued to slow down more dramatically than was expected and numbers dipping even lower in the third quarter, the country might just see its first recession since 2009.

Suggested Reading

 

2. US Q4 GDP growth may just be at 0.4% – NY Fed Nowcast

What You Should Know

While Wall Street has been a period of relative euphoria in recent weeks, GDP models published by regional Federal Reserve banks in New York and Atlanta on Friday, paint a very different picture for the country. The New York Fed’s Nowcast for Q4 GDP suggests growth will be limited to just 0.4%. The model’s earlier projection was for 0.7% growth. The Atlanta Fed’s GDPNow model lowered it projections on Friday to just 0.3% for the fourth quarter, compared with 1% a week ago.

What You Should Look Out For

The NY Fed has cited “negative surprises” in recent economic reports, including a fall in October manufacturing production numbers as the reason for the dimmed predictions. The Atlanta Fed’s predictions are based on Friday’s consumer spending numbers that showed retail sales, barring vehicles and gasoline, had inched up only 0.1% in October.

It is important to note that these predictions are based on incoming economic data and may be changed before the year is out. However, the predictions to suggest that economic growth has been more sluggish than expected, which is in stark contrast to the President’s claim of a booming economy.

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