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Dec 17, 2018

Asia,Europe & US Markets at Close Report

                                                                         ASIA

Asian stocks broadly higher as investors look to key US, China policy events

Eustance Huang

Stocks in Asia were mostly higher on Monday following a report suggesting further turmoil for the markets in 2019.
Investors were setting their sights on key policy meetings in the coming week — ahead of the U.S. Federal Reserve’s upcoming interest rate meeting and as China on Tuesday marks the 40th anniversary of the country’s reforms under former leader Deng Xiaoping.
President Xi Jinping is expected to deliver a major speech on Monday. It comes as Beijing’s trade war with Washington spurs government advisors and think tanks to urge for urgent reforms in Asia’s largest economy.
The mainland Chinese markets were mixed by the end of their trading day after the country reported lower than expected economic data last Friday. The Shanghai composite rose 0.16 percent to close at around 2,597.97 while the Shenzhen composite declined by 0.309 percent to end the trading day at about 1,323.31.
One investor told CNBC’s “Squawk Box” on Monday that the bargain hunting for Chinese shares has already started.
“Over the next few months, if there were to be any more weakness in the Chinese market, we think that there will be more investors coming in to buy,” said Khiem Do, head of Greater China investments at Barings. “The Chinese markets are actually quite cheap.”
Meanwhile, Hong Kong’s Hang Seng index was slightly higher in its final hour of trade.
In Japan, the Nikkei 225 rose 0.62 percent to close at 21,506.88 while the Topix index saw gains of 0.13 percent to finish the trading day at 1,594.20. Shares of conglomerate Softbank recovered from earlier losses during the session to gain 0.52 percent ahead of the anticipated public listing of its mobile unit on Dec. 19.
South Korea’s Kospi closed fractionally higher at 2,071.09.
Australia’s ASX 200 saw gains of 1 percent to close at 5,658.3, with almost all sectors in positive territory.
The heavily-weighted financial subindex, however, slipped 0.11 percent, with shares of Australia’s so-called Big Four banks mostly seeing losses. Australia and New Zealand Banking Group dropped 1.57 percent, Westpac shed 0.92 percent and National Australia Bank slipped 0.59 percent. Commonwealth Bank of Australia, on the other hand, recovered from earlier losses to rise 0.65 percent.
“The ‘Santa Rally’ which had been hoped for has proven to be frustratingly elusive; and now markets are quite happy, if not desperate, for at least a dovish line to be thrown by the FOMC (and other global central banks),” said Mizuho Bank in a note on Monday, in reference to the U.S. central bank’s upcoming Federal Open Market Committee meeting on Dec. 18 and 19.


Asia-Pacific Market Indexes Chart


TICKERCOMPANYNAMEPRICECHANGE%CHANGE
NIKKEINikkei 225 IndexNIKKEI21506.88132.050.62
HSIHang Seng IndexHSI26087.98-6.81-0.03
ASX 200S&P/ASX 200ASX 2005658.3056.301.00
SHANGHAIShanghaiSHANGHAI2597.974.230.16
KOSPIKOSPI IndexKOSPI2071.091.710.08
CNBC 100CNBC 100 ASIA IDXCNBC 1007431.8643.960.60
BIS: Market sell-off wasn’t ‘isolated’
The Bank of International Settlements (BIS), an umbrella group for the world’s central banks, said on Sunday that recent market tensions are a sign of more turmoil to come. It warned that a normalization of monetary policy is likely to trigger a flurry of sharp sell-offs in the near future.
“The market tensions we saw during this quarter were not an isolated event,” Claudio Borio, head of the monetary and economic department at the BIS, said in the report.
“Monetary policy normalization was bound to be challenging, especially in light of trade tensions and political uncertainty,” Borio added.
The report comes at a time when stocks worldwide have come under renewed pressure from a myriad of factors, ranging from a global trade war between the world’s two largest economies, to intensifying concerns about a possible economic slowdown over the coming months.
Stocks on Wall Street saw sharp declines on Friday after weaker-than-expected economic data out of China and Europe which fueled concerns of an economic slowdown worldwide.
On Friday, the Dow Jones Industrial Average plunged nearly 500 points to close at its lowest level since early May, following a wider decline in stock markets globally. The Dow is now lower by 2.5 percent for the year. U.S. futures on Monday implied a partial recovery for the Dow at the open.
The S&P 500 fell 1.9 percent to 2,599.95 — its lowest closing level since April, while the Nasdaq Composite pulled back 2.26 percent to 6,910.66. The losses on Friday erased gains for the week across the major indexes.
Renault reportedly demands Nissan shareholder meeting
Renault’s deputy CEO, Thierry Bollore, wrote a letter to Nissan urging the Japanese automaker to hold a shareholder meeting, according to a report by the Wall Street Journal on Sunday.
In the letter, Bollore cited the arrest of former chairman Carlos Ghosn in Tokyo last month as a “significant risk” to the car makers’ partnership. Ghosn was apprehended in November on suspicions of underreporting income and misusing company funds.
Ghosn is considered the mastermind behind the alliance between French automaker Renault and Japanese manufacturers Nissan and Mitsubishi. Renault saved Nissan from the brink of bankruptcy in 1999, and took a 40 percent stake in the company.
Shares of Nissan slipped 0.28 percent on Monday while Mitsubishi fell 1.19 percent.
Currencies
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.385 after touching lows below 96.5 in the previous trading week.
The Japanese yen, widely viewed as a safe-haven currency, traded at 113.40 against the dollar after touching highs around 112.3 last week. The Australian dollar was at $0.7176 after seeing highs around the $0.724 handle in the previous trading week.
— CNBC’s Sam Meredith, Javier E. David and Fred Imbert contributed to this report.he S&P 500 fell 1.9 percent to 2,599.95 — its lowest closing level since April, while the Nasdaq Composite pulled back 2.26 percent to 6,910.66. The losses on Friday erased gains for the week across the major indexes.
Renault reportedly demands Nissan shareholder meeting
Renault’s deputy CEO, Thierry Bollore, wrote a letter to Nissan urging the Japanese automaker to hold a shareholder meeting, according to a report by the Wall Street Journal on Sunday.
In the letter, Bollore cited the arrest of former chairman Carlos Ghosn in Tokyo last month as a “significant risk” to the car makers’ partnership. Ghosn was apprehended in November on suspicions of underreporting income and misusing company funds.
Ghosn is considered the mastermind behind the alliance between French automaker Renault and Japanese manufacturers Nissan and Mitsubishi. Renault saved Nissan from the brink of bankruptcy in 1999, and took a 40 percent stake in the company.
Shares of Nissan slipped 0.28 percent on Monday while Mitsubishi fell 1.19 percent.
Currencies
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.385 after touching lows below 96.5 in the previous trading week.
The Japanese yen, widely viewed as a safe-haven currency, traded at 113.40 against the dollar after touching highs around 112.3 last week. The Australian dollar was at $0.7176 after seeing highs around the $0.724 handle in the previous trading week.
— CNBC’s Sam Meredith, Javier E. David and Fred Imbert contributed to this report.

                                                                          EUROPE

Europe closes lower amid fears of a global growth slowdown; Asos profit warning weighs on retail

Ryan Browne, Spriha Srivastava


European stocks closed lower on Monday, amid escalating concerns of a sharp slowdown in global growth.

European Markets: FTSE, GDAXI, FCHI, IBEX


TICKERCOMPANYNAMEPRICECHANGE%CHANGEVOLUME
FTSEFTSE 100FTSE6773.24-71.93-1.05757578517
DAXDAXDAX10772.20-93.57-0.8688246086
CACCACCAC4799.87-53.83-1.1186410165
The pan-European Stoxx 600 closed provisionally down 1.14 percent, with almost all sectors and every major bourse in the red.
Retail was down the most, off by 2.7 percent, after British online fashion retailer Asos issued a profit warning. The firm cut its annual sales growth and profit margin forecasts, becoming the latest U.K. retailer to highlight very poor November trading.
U.K. retail stocks made heavy losses, with Asos down 37.55 percent, Next down 4.63 percent, Marks & Spencer down 4.94 percent and Boohoo shares down 13.74 percent.
Elsewhere in the sector, shares of Zalando slumped to the bottom of the Stoxx 600, pressured by the broader downturn in retail stocks. H&M also fell, despite reporting that sales growth in the September-November period rose 6 percent from the previous year. Zalando dipped 11.63 percent while H&M slipped 8.53 percent.
On Wall Street, stocks sunk deeper into correction territory, with the Dow Jones Industrial Average down 100 points, the S&P 500 off by 0.2 percent and the Nasdaq Composite trading around the flatline.
Global growth concerns
Market focus is largely attuned to concerns surrounding cooling global growth after soft economic data from China and Europe in the last week added further concerns. On Friday, China reported weaker-than-expected retail sales data, growing at its weakest pace since November 2003.
The Bank of International Settlements (BIS), an umbrella group for the world’s central banks, said on Sunday that recent market tensions are a sign of more turmoil to come. It warned that a normalization of monetary policy is likely to trigger a flurry of sharp sell-offs in the near future.
Meanwhile, U.K. Prime Minister Theresa May announced in parliament that a meaningful vote on her Brexit deal would take place on the week commencing Jan. 14. Britain has just over 100 days to leave the bloc on March 29 and chances of a no-deal or a chaotic Brexit deal have gone up after strong oppositions to May’s draft deal.

                                                                        US


S&P 500 drops more than 2% to new low for 2018, Dow dives 500 points

Thomas Franck


Stocks dove Monday, pushing the S&P 500 to its lowest level of the year as investors grew increasingly worried that the Federal Reserve’s plan to raise interest rates could be too much for the economy and stock market to handle.
The S&P 500 fell as much as 2.5 percent to 2,530.6, surpassing its February low of 2,532.69. As of the latest reading, the S&P 500 was at 2,539.73, down 2.3 percent. The Dow Jones Industrial Average lost more than 500 points, bringing its two-day losses to more than 900 points. Shares of Amazon and Goldman Sachs led the declines.
The Dow and S&P 500, which are both in corrections, are on track for their worst December performance since the Great Depression in 1931, down 7 percent so far for the month. The S&P 500 is now down more than 4 percent for the year.
The Cboe Volatility Index — one of Wall Street’s favorite gauges of market fear — hit 23.79, its highest level since Dec. 10 and volume for the stock market was heavier than usual. The tech-heavy Nasdaq Composite dropped 2.5 percent as Microsoft dropped nearly 3.6 percent. The Russell 2000 — which tracks the performance of smaller companies — entered a bear market, down 20 percent from its 52-week high.
DoubleLine Capital CEO Jeffrey Gundlach said Monday that he “absolutely” believes the S&P 500 will go below the lows that the index hit early in 2018.
“I’m pretty sure this is a bear market,” Gundlach told Scott Wapner on CNBC’s “Halftime Report. The major averages fell to session lows following his comments.
The Fed is expected to hike its benchmark overnight lending rate for a fourth and final time of 2018 on Wednesday. While fears of rising interest rates and an ambitious central bank have spooked markets throughout 2018, such concerns have heightened over the past month as inflation and growth expectations recede.
“With increased stock market volatility and signs of slower growth overseas, there are increasing calls for the Fed to halt its rate increases,” wrote David Kelly, chief global strategist at JPMorgan Funds. “This is where the Fed needs to keep its head first, because current Fed policy is neither too aggressive nor too tight and second, because a change of course at this point could undermine confidence.”
President Trump doubled down on his criticism of the Fed’s rate hiking path on Monday, lambasting the central bank for “even considering” another rate hike just days before its final meeting of the year.
The so-called yield curve remains partially inverted, with the yield on benchmark 2-year Treasury notes exceeding the rate on 5-year notes. The recent fall in interest rates, as well as marked flattening in the yield curve, has pushed bank stocks lower, with the SDPR S&P Bank ETF down more than 20 percent in the past six months.
“Bond King” Gundlach later added that he still believes yields will move higher as the U.S. Treasury continues to auction tens of billions of dollars worth of debt.
Recent economic data have reignited worries of economic slowdown around the globe and kept a lid on stock returns. The Dow fell nearly 500 points and the S&P 500 closed down 1.9 percent on Friday to 2,599.95 — its lowest closing level since April — after China reported industrial output and retail sales growth numbers for November that missed expectations.
Meanwhile, New York manufacturers reported on Monday that business activity is still expanding, but growth slower much more than expected in December. The Empire State Manufacturing Survey’s general business conditions index, aggregated by the Federal Reserve Bank of New York, fell to 10.9 from 23.3 in November, falling short the 20.6 print expected by economists polled by Refinitiv.
Homebuilder sentiment fell to its lowest level since May 2015 in December as potential buyers delay purchasing new homes despite a pullback in mortgage rates in the past month. Sentiment declined four points in December to 56, well below December 2017′s print of 74, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, D.C., Sept. 26, 2018.
Andrew Harrer | Bloomberg | Getty Images
“With just ten trading sessions left for stocks in 2018 the chance of a Santa Claus rally appears less than slim,” John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, wrote Monday. “Sentiment remains sour toward stocks even as fundamentals and relatively cheap valuations leave stocks poised to move higher in the New Year.”
Shares of Goldman Sachs fell 2.6 percent Monday after Malaysian authorities filed criminal charges against the bank and two former partners in connection with the 1MDB financial scandal.
The company is under fire for its role in helping raise $6.5 billion through three bond offerings for 1Malaysia Development Bhd (1MDB), which is the subject of investigations in at least six countries.
Electronics retailer Best Buy was on track for a rough day on Wall Street after Bank of America Merrill Lynch downgraded its stock to underperform on concerns of slowing sales.
BofA cited “deceleration in industry growth trends and continued caution on key product categories such as TVs, Apple products and gaming,” stated the Monday note by analyst Curtis Nagle. The downgrade — and worries of softer sales — comes during one of the most important times of the year for the consumer technology retailer as shopper flock to purchase holiday gifts.
Best Buy’s stock fell more than 5.2 percent.
— CNBC’s Michael Sheetz and Gina Francolla contributed reporting.

Source: CNBC

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