Summary:
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USDCAD at 18-month highs as mixed NA data released
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US government shutdown looms
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UK economy perks up but warning signs remain
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US stocks attempt to recover after heavy declines
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Stock of the week Daimler
The main data points of the afternoon were released ahead of the US session with data from both the US and Canada providing further insight into their respective economies. First off the US, where we got the final GDP reading for the third quarter. A print of 3.4% in annualised terms is strong compared to many of its peers, but against consensus forecasts for a 3.5% rise in line with the prior this represent a mild disappointment. At the same time we also had the most recent growth figures from Canada where there was a positive surprise with GDP M/M bouncing back from a -0.1% print last time to come in above the 0.2% expected at 0.3%. USDCAD has reached an 18-month high today and is currently in the green for a 7th consecutive day. However, the data on the whole isn’t really supportive of this rise and we could be set for a pullback lower.
US President Donald Trump has warned of a very long government shutdown if Democrats vote against the idea to include funds for a wall with Mexico. He also added on his Twitter account that “Even President Ronald Reagan tried for 8 years to build a Border Wall and wa unable to do so. Others also have tried. We will get it done, one way or the other!” Let us remind that the House approved a spending bill which includes money to fund the wall on Thursday but this bill is very likely to be rejected by the Senate. The deadline passes at midnight.
The pace of economic growth in the UK for the three months to September came in at the fastest rate in nearly two years, but the gloss was taken off this pleasing development with another fall in business investment, which is becoming an increasingly worrisome trend. According to the ONS GDP grew by 0.6% in Q3 as was widely expected, with the warm weather and feel-good factor created by Gareth Southgate’s side exceeding all expectations in Russia providing a sizable boost to consumer spending.
It’s been a testing time of late for US stock markets with heavy declines and the Dow Jones on track for its worst December since 1931 when the Great depression was choking the economy. We’ve seen a bounce in today’s trade however with all 3 of the major benchmarks moving higher, but this recovery remains fragile and tentative in nature for now. Even after these gains however, there remains a fair way to go to stop this month going down as one of the worst Decembers in history. The final month of the year is typically good for stocks, with not only December often seeing gains but also sizable ones at that. The US500 has seen an attempted bounce this afternoon but the market remains under pressure and trading in the red for the 7th day in a row.
2018 was far from good for the European car industry. Trade wars led to issuance of a few profit warnings while probes related to diesel scandal undermined investors’ sentiment. Increased global awareness of the impact carbon dioxide has on environment makes developing of electric vehicles a must for automobile companies in order to survive. In this analysis we will take a look at how Daimler copes with this major shift in the automobile industry.
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