Global Markets Update Monday 3 December 2018

Posted on 03 Dec 2018

The G20 summit got under way in Argentina, with attention focused on a meeting between President Donald Trump and President Xi Jinping where they will discuss the trade dispute between the US and China.

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United Kingdom

The FTSE 100 rose 0.4% over the week.

As Theresa May toured the UK in an attempt to persuade voters of the benefits of her Brexit deal, the Bank of England and Treasury laid out their forecasts for the economic consequences of leaving the EU.

The annual rate of growth in consumer borrowing fell to 7.5% in October compared to the same month the previous year. The was the lowest annual rate since May 2015.


The S&P 500 rallied 4.0% over the week.

Federal Reserve chairman Jay Powell boosted hopes that the Fed would be less aggressive in raising rates when said US interest rates were “just below the broad range of estimates of the level that would be neutral for the economy”.

The core personal consumption expenditures price index, the Fed’s preferred measure of inflation, rose 1.8% in October compared to a year earlier, down from the 2.0% pace recorded in September. This was the weakest reading since February.

Canada’s economy slowed sharply in the third quarter, rising at an annualised rate of 2.0% compared to the 2.9% rate of growth seen in the second quarter. Higher interest rates and trade tensions during the summer prompted households and businesses to cut back on spending and investment.

General Motors announced it was shutting two of its Michigan plants, along with closures in Ohio, Maryland and overseas. Shares in the company are trading near a 25-year low.


The Eurofirst 300 rose 1.1% over the week.

Eurozone inflation eased to 2.0% in the year to November, down from a rate of 2.2% in October, However, core consumer prices, which exclude food and energy, rose by 1.1% in November.

The Ifo survey of German business confidence fell to 102 in November, its third consecutive decline.


The Nikkei 225 jumped 3.3% over the week.

The Nikkei-Markit flash manufacturing purchasing managers’ index fell to 51.8 in November, its lowest since November 2016.

Retail sales grew 3.5% in October compared to a year earlier. This was the strongest pace of growth since December 2017.

Industrial production rose by a stronger-than-expected 4.2% year on year in October, a marked recovery from the contraction of 2.5% seen in September.

Pacific Basin

Shares in South Korean construction and railway companies soared after the UN granted Seoul a sanctions waiver to develop rail links with North Korea.

The Bank of Korea raised its benchmark interest rate for the first time in a year, citing concerns over high consumer debt and financial imbalances.

China’s official manufacturing purchasing managers’ index fell to 50 in October.

Emerging Markets

Emerging market equities and currencies had their best month since January, boosted by hopes that the US and China would resolve their trade dispute.

Russian security forces fired at a trio of Ukrainian naval ships off the disputed Crimea peninsula. Russia later seized the vessels in what has become the most severe escalation since Russia’s annexation of Crimea in 2014.

Brazil’s economy grew 0.8% in the third quarter, its fastest pace in 18 months, as the country bounced back from a crippling trucker strike.

India’s GDP expanded at a slower-than-expected pace of 7.1% in the third quarter compared to the same period the previous year as higher oil prices and interest rates weighed on growth.


The yield on the 10-year US Treasury bond briefly dipped just below 3.0% towards the end of the week, reflecting growing speculation that the Fed would be less aggressive in raising rates.

Investors pulled more than $5 billion from corporate bond funds over the week. The credit market is on track for its worst year since the financial crisis a decade ago.