Kristal Weekly Feed | 2nd December 2019

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

Positives

• Gold climbs $7.40 despite the trade tensions between the US and China
• US Treasury yields close higher in anticipation of corporate debt sales in December
• In its debut week in Hong Kong, Alibaba’s shares close at +13%.

Negatives

• In sync with Asian and European equities, US stocks experience a drop this week
• The Hang Seng Index falls 2% despite a 36% rise in trading volumes

Now, for more detail.

Positives

1. Gold climbs $7.40 despite the trade tensions between the US and China

What You Should Know

The most active contract on Comex – Gold Feb 2020 (GCG20) gained $7.40 on Friday. At $1460.8 per ounce, this was a gain of 0.5%. With Trump signing a Bill supporting Hong Kong protestors, many investors are worried about a deterioration in the US-China trade talks.

What You Should Look Out For

The direction that gold prices might take in the coming months would depend on the interest rate movement, the resolution of the trade tensions, and the movement of USD with respect to gold pricing. The new round of US tariffs on Chinese goods scheduled for December 15, 2019, should highlight the state of international trade.

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2. US Treasury yields close higher in anticipation of corporate debt sales in December

What You Should Know

With the anticipation of heavy corporate debt sales in the first week of December following the Thanksgiving holiday, many corporate underwriters sold Treasurys. This led to the rise in the yield of the U.S. 10 Year Treasury Note (TMUBMUSD10Y) by 1.2 basis points and reached 1.778%. Further, the yield of the U.S. 30 Year Treasury Bond (TMUBMUSD30Y) also rose by 1.3 basis points reaching 2.04%.

What You Should Look Out For

The investors are sceptical about international trade developments due to the fresh tensions between the US and China. Further, the German automaker, Daimler AI announced mass layoffs last week which fuelled investor concern too. This week should offer a better sense of the market as the light trade last week due to Thanksgiving could have exaggerated market moves.

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3. In its debut week in Hong Kong, Alibaba’s shares close at +13%

What You Should Know

Alibaba started trading in Hong Kong from Tuesday (November 26, 2019). At the end of the first week, the stock has climbed 13% closing at 198.40 Hong Kong dollars on Friday. The secondary listing by Alibaba was the biggest share sale of the world this year.

What You Should Look Out For

While Alibaba shares had a good week, the Hang Seng Index closed 2% lower. Further, the strained US-China trade talks can also have an effect on the share prices.

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Negatives

1. In sync with Asian and European equities, US stocks experience a drop this week

What You Should Know

After the Thanksgiving holiday, as trading resumed on Wall Street the Dow Jones Industrial Average, Nasdaq 100, and S&P 500 indices experienced a drop this week. This was in sync with the slump in the Asian shares as well as the Stoxx Europe 600 Index.

What You Should Look Out For

December 15, 2019, is the date that you should mark on your calendar as it will outline the current scenario of the US-China trade talks which have been under a lot of strain after Trump signed the Bill expressing support for Hong Kong protestors. Thierry Wizman of the Macquarie Group told Bloomberg that by December 15, 2019, we will have a clearer picture of whether the negotiations between the US and China will be derailed or stay on track.

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2. The Hang Seng Index falls 2% despite a 36% rise in trading volumes

What You Should Know

Despite a rise in trading volumes of 36% than the 30-day average, the Hang Seng Index fell by 2% this week. Further, the FTSE China A50 Index of onshore-listed large caps fell by 1.3% while the Hang Seng China Enterprises Index fell by 2.5% too. While there were no clear triggers for the drop, speculations were about the increased tensions pertaining to the US-China trade talks being the driving factor.

What You Should Look Out For

Over the next two weeks, investors expect to have more clarity regarding the trade talks which might swing the markets strongly in one direction. Keep an eye out for the new list of tariffs on December 15, 2019.

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