Summary for the 18th of February 2019


The Asian stock markets closed in positive today due to an expectation of agreement between the US and China regarding trade . The trade talk will be continuing this week in Washington, as of today, no detail from the talk has emerged yet.

The British prime minister yet again will be trying to get the Members of parliament to agree on the changes of the Brexit deal that also include the backstop solution to only be a temporarily solution. The backstop solution is the deciding factor to get the Brexit supporters in her own political party to agree on the changes of the Brexit deal.

The US Manufacturing production fell 0.9% in January, the market was expecting unchanged movement. It was especially the large drop in motor vehicle assemblies that had pulled down the January number. The vehicle assemblies fell by 13.9%, biggest decline since the financial crisis. It is not unusual for a 10% decline in a month. The ISM Purchasing Managers Index in the US fell in December, but had picked up the pace in January to a level of 56.6. A value above 50 means the economy is in expansion. The US NY Empire StateManufacturing Index also rose.

There have been some weak economic indicators from the US lately. The unexpected decline of the US retail sales numbers that were released last week has led to the Atlanta Fed to downward adjusted its GDP forecast. The forecast for the personal consumption expenditures fell from 3.7% to 2.6%. The GDP growth is adjusted to 1.5% from 2.6% for the fourth quarter of 2018.

From the fundamental standpoint, it is difficult to see any signs of a slow growth in the US economy. The labor market is strong, the hourly earnings is rising, and the inflation rate is falling. The US Consumer Sentiment supports this, the University of Michigan's consumer sentiment for February (preliminary) rose by about 4%, led by the consumer expectations.

The UK Retail Sales rose more than the market expected. In January, the retail sales rose by 1%. Even though the UK consumer spending has slowed down recently due to Brexit uncertainty, the fundamental values are still positive. The unemployment rate is low, the hourly earnings is rising, and the inflation rate is declining which makes the real income higher.

Indices on the 18th of February: Expectations from the trade talk, the somewhat positive manufacturing  index and consumer sentiment and the sights of the Fed is slowing down on the contractionary policy, have given a positive close for the US stock market. Trade talk and higher commodity price has led the Asian stock markets to a positive close as well.

Dow: +1.7% (15th of February )
S&P 500: +1.1% (15th of February)
Nasdaq: +0.6% (15th of February)
Nikkei: +1.8%  (18th of February)
Chinese indices: +3.2% (18th of February)
STOXX Europe 600 Index: +0.23% (18th of February)

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