Weekly Market Update

09/12/2019

We saw a little more volatility in markets as the long-held assumption on a trade war resolution being imminent was brought into question ahead of the NATO meeting last week. Economic data, particularly in relation to the PMI data served to remind financial markets that the economic backdrop remains fragile. Finally, we could know the path of the UK in terms of Brexit and much more if the market consensus and opinion polls are correct and we see a Conservative majority in the general election.

The US economy added the largest number of jobs for 10 months in November, with the latest figure comfortably beating analysts’ expectations. The figures showed 266,000 jobs were added last month, while the jobless rate dipped to 3.5 per cent from 3.6 per cent. This implies the US consumer will continue to be strong and should ease the pressure on the Federal Reserve from Donald Trump to cut interest rates further.

Elsewhere, evidence of the health of the global economy was mixed. Eurozone, UK and Japanese manufacturing PMIs were revised up for the final count, though France was still the only one above 50, in expansion territory. China’s private-sector Caixin PMI surprised positively with a small rise in November, even as growth in capital expenditure hit a three-year low.

Japan’s prime minister Shinzo Abe launched the country’s first fiscal stimulus since 2016, with a larger-than-expected $121bn package. The spending is a response to lacklustre demand both domestically and externally, partly as a result of the introduction of an 8 per cent consumption tax in an attempt to increase government revenues.

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