Morning Minutes 11/30/2018

Markets Mixed as the G-20 Summit Starts

November 30, 2018
8:45 am EDT

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Stock markets around the world are mixed heading into month-end. China-sensitive markets have continued to do well with Shanghai rallying 1.0% overnight, the Hang Seng gaining 0.3% and copper steady ahead of tomorrow’s big dinner meeting between US President Trump and Chinese President Xi at the G-20 summit. President Trump has brought a carrot and stick approach to the discussion, offering the potential for a deal on trade while also threatening more tariffs if things don’t go his way. While the US-China meeting is likely to capture the spotlight, any reports of meetings between Saudi Arabia and Russia could impact energy trading heading toward next week’s big OPEC decision on potential production cuts.

US index futures are down about 0.5% ahead of the meeting, but the VIX remains below 20 so fear hasn’t really spiked. The US 10-year treasury yield remains above 3.00% indicating that while this week’s Fed comments may have dialed back the hawkishness a bit, investors don’t see the Fed stopping their program of quarterly rate hikes for at least six months either. Today’s Chicago PMI report, due at 9:45 am EDT may give an early indication of how the US economy has been doing in November ahead of Monday’s national reports. The street is expecting a reading of 58.0 down form 58.4 last month.

While US indices declined slightly on Thursday, the S&P/TSX finished the day with a slight gain. Today could be mixed for Canadian trading. The oil price is down 1.0%, but WTI continues to hold the $50.00/bbl level. Canadian Q3 GDP grew 2.0% over year, down from Q2’s 2.9% growth rate, but in line with expectations. Canadian industrial prices rose 0.2% in October, same as the month before, while raw materials prices sank 2.4%, a downward acceleration from September’s 1.0% drop. Falling commodity prices and their negative impact on the Canadian economy reduces pressure on the Bank of Canada to keep raising interest rates, which could then help to ease the pressure on interest sensitive sectors of the Canadian stock market like financials, real estate and utilities.

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