More records fall for US stocks; EURUSD dips below $1.10

Summary:

• US500 hits new all-time high

• UK stocks rise to 2-month peak 

• EURUSD dips after better than expected US data

• Chinese industrial companies feel the pain of lower producers’ prices

• Top 3 charts - Black Friday special 

The recent rally in US stocks is showing little sign of abating with large cap benchmarks trading close to their highest ever levels on the European cash close. Today is the final full session of the week for Wall Street, with the US celebrating Thanksgiving tomorrow with a bank holiday and many traders taking the rest of the week off. US stocks began the week with a gap higher and they’ve not really looked back since with a steady grind higher culminating in a new all-time high of 3150 for the US500. 

The FTSE 100 is working on a 4th consecutive daily gain with the benchmark trading at its highest level since September and looking to make a decisive break above prior resistance in the vicinity of 7450. Shares across Europe are trading in the green and a melt-up in US indices continues to play out with futures pointing to new all-time highs for the major benchmarks this afternoon before North America break for the Thanksgiving holiday. Shares in retailers will be in focus in the coming days ahead of Black Friday, and it’s worth noting that several of the laggards amongst UK blue-chips today come from this space with JD sports the worst performing stock on the index while Tesco and Ocado are also trading lower.

A major data pack from the United States, including preliminary durable goods orders data for October and revision of the Q3 GDP figures, has been released at 1:30 pm GMT. The annualized GDP growth of 2.1% QoQ was higher than estimated 1.9% QoQ. Details showed higher exports and imports than preliminary reading - 0.9% and 1.5% respectively. Personal consumption at 2.9% was unchanged against the first release. Major improvement was spotted in gross private investments as those showed a decline of 0.1% against -1.5% signalled by preliminary print. EURUSD breaks below the daily trading range and tests 1.10 handle. 

Moods on the markets remain upbeat as China and the United States are said to be closing in on the “Phase One” trade agreement. However, one should keep in mind that while both sides continue to raise expectations, no real improvement took place yet. The latest data on profits of the Chinese industrial companies confirms it. Profits dropped 9.9% YoY in October, the biggest drop on record ( since at least 2011). This drop can be ascribed to declining producers’ price in China. Unfortunately, a rebound may not come soon. Chinese manufacturing PMI sits in a contraction territory and data for October showed the 17th straight month of deteriorating outlook for new export orders. Situation may even get worse as another round of US tariffs may come into force on December 15. A point to note is that the Chinese authorities have launched a number of stimulating measures in order to tackle faltering growth and as one can see, those failed to show a major effect. Producers’ prices are expected to continue falling in November and industrial profits could fall even lower as well. Tariff rollback could boost demand but it should be taken for granted given that China and the US have walked away from the negotiating table a few times already.

Our top 3 charts of the week has a twist this week with the focus on retailers ahead of Black Friday and can be viewed in full here.