Fund Library News Wire
| Friday, December 14, 2018
By Mike Keerma
The big North American stock indices posted losses again on the week, as
investors reacted to slower-than-expected growth in both China and the
eurozone. In addition, the European Central Bank announced earlier this
week that it is ending its €2.6 trillion (US$3.9 trillion) bond buying
program even as the eurozone posted a marginal 0.2% GDP growth rate in the
third quarter. Markets continued their downtrend on Friday, despite some
signs of easing in the U.S.-China trade dispute, a 0.2% monthly increase in
U.S. retail sales in November, and a 0.6% increase in industrial
production. The blue-chip Dow Jones Industrial Average is now down more
than 10% from its October high, a decline that puts it into correction
S&P 500 Composite Index
fell 1.3% on the week, while the
Nasdaq Composite Index
lost 0.8%. Toronto’s
S&P/TSX Composite Index
retreated 1.4%, dragged down by the energy sector as
fell 1.9% on the week.
Official Chinese economic data showed that both retail sales and industrial
production missed consensus estimates, with retail sales rising 8.1% in
November compared with estimates of 8.8%, and industrial output rising 5.4%
compared with estimates of 5.9%. Investors remain concerned, because
China’s official data are typically overstated, and the true picture may be
quite a bit worse. Adding to the suspicion that all may not be quite as
rosy as painted by China’s official sources, the Ministry of Finance
announced that various tariffs on American-made autos would be cut to 15%
from 40% for three months starting Jan. 1. In addition, China purchased
1.13 million tonnes of U.S. soybeans, its first major purchase since
imposing tariffs on U.S. soybean imports back in July. This is notable,
because China does not grow its own soybean supply and relies mostly on
U.S. and some Brazilian crops to fill its livestock feed and other needs.
Some analysts believe that intimations of a slowdown in the world’s
second-largest economy, along with year-end tax-loss selling and portfolio
window dressing have investors worried that market indices could break
below some key technical indicators, triggering further
“black-box-inspired” selling. Others, however, feel that markets are
already at or near their point of maximum pessimism, and may be primed for
a significant surprise rally in coming weeks.
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Market Activity page
regularly for active updates on key market indexes and commodities.
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