Market movers today
From all of us at Danske Bank research, we wish you a happy and prosperous new year.
Today is rather slow in terms of economic releases while we wait for key economic indicators on Friday such as the US labour market report and the euro area inflation prints.
Focus today will be on the recent volatile equity developments as markets come to the new year with ‘fresh eyes’, amid the US government shutdown and a new issuance season from European governments. See also, Strategy: EGB supply and ECB reinvestment outlook for 2019 – gross issuance set to increase, but with limited issuance of ultra-long bonds.
Selected market news
After a brutal 2018 for equity markets, Asian stock markets begin the new year in the red with the publication of weak economic figures from China. US equity futures are trading in the red as well.
U.S. President Donald Trump is attempting to break the budget deadlock by inviting leaders from both parties to make a deal. The government has been in partial shutdown for 11 days as Trump remains adamant about securing funding for his wall, which was a key electoral pledge. The democrats will assume a majority in the House of Representatives and their leader, Nancy Pelosi, deems the wall “immoral”.
Trump responded to North Korean leader Kim Jong Un. He tweeted “I also look forward to meeting with Chairman Kim,” in response to threats uttered in a televised speech by the Chairman about North Korea taking “a new path” if economic sanctions are not eased.
Year-end speeches from global leaders, such as China’s President Xi Jinping and Italian President Sergio Mattarella, highlighted key 2019 market themes, namely global economic slowdown and political risk.
China’s President Xi Jinping stressed self-reliance in his new year’s speech as the country faces economic slowdown and US trade belligerence. China’s Caixin PMI was published this morning, yielding further confirmation of China’s economic slowdown. The index fell more than analysts expected to 49.7 in December from 50.2 in November. The official manufacturing PMI published on Monday also broke through the critical 50 level, corroborating a slowdown.
Italy’s President Sergio Mattarella used his speech to chastise Deputy Prime Ministers Matteo Salvini and Luigi Di Maio about driving through a budget piling on more debt on an already highly indebted country. He also voiced his hope for a “serene climate” as European elections approach.
