Market news 29 November 2019

US consumer confidence still going strong, boding well for growth in 2020...

• The Conference Board US Consumer Confidence Index remained elevated in November, reading 125.5 (October 126.1). Whilst it has declined from the readings in the high 130s recorded late last year, it remains well above the long-term mean value of around 100.
• There was a slight moderation in labour market data – more consumers reported challenges of securing new jobs and the share of respondents describing jobs as “plentiful” fell to 44.8% (October: 47.7%).

Some tentative pick-up signalled for the industrial outlook...

• The German IFO survey read 95.0 in November (October: 94.7, consensus: 95.0), helped by improving trade sector sentiment. Manufacturing and construction sectors were down over the month, consistent with previous months’ trend. Overall, German GDP growth is expected to be +0.2% in the final quarter of the year.
• US Q3 GDP growth was revised upwards by 0.2% to +2.1% in the second estimate (albeit this was due to an upwards revision in inventories). The October durable goods report was strong, with orders up +0.6% over the month (September: -1.4%, consensus: -0.9%), although it is too early to ascertain whether this year’s slump in business capex has finally come to an end.

Equities rise higher, but markets fail to share enthusiasm...

• Global equities made new highs during the week, propelled by US indices. Other DM equity indices were more mixed this week, but still ended up delivering 2-3% gains over the month. The apparent stabilisation in business sentiment and ongoing expectation for a “Phase One” trade deal between the US and China, coupled with a supportive global monetary policy stance, has pushed equity price multiples higher, although analysts are yet to materially increase earnings forecasts.
• Rates markets failed to share in this enthusiasm, with core government markets sideways over the week and slightly firmer over the month. Cyclical commodities such as copper and oil were modestly higher over the month.