WEEKLY FOCUS                                               02 December 2019

The large-cap Dow Jones Industrial Average, the S&P500 and the technology heavy Nasdaq reached all-time highs again during a holiday shortened week. Early indications of a favourable holiday shopping trend boosted shares of Amazon and the discretionary sector outperformed. Treasury bonds remained in a tight range but corporate bonds benefitted from the risk-on sentiment and spreads narrowed. French luxury goods maker LVMH announced a deal to buy Tiffany & Co. and Charles Schwab announced a plan to acquire discount broker TD Ameritrade.

The week had started well for semiconductor stocks after China announced new intellectual property legislation which would further ease trade tensions after it is enacted. Economic data was supportive as new home sales was better than estimated and durable goods orders for October rebounded. Third quarter GDP estimates were also revised higher to an annualised 2.1% from 1.9% on account of more resilient business investment. This morning, data released by IHS Markit on manufacturing PMIs indicate sequential improvements in China, Germany and France. US data remains above the 50 expansion level and is a sign that the US and China are currently the engines of global growth. The flip side of it however, is that global stock markets are highly sensitive to the outcome of trade talks between the two countries.

In the UK, focus remains on the outcome of the elections of 12th December. YouGov polls predict 359 seats for the Conservative Party and this would be the largest majority in decades. This would enable Prime Minister B. Johnson to deliver a new Brexit deal to parliament before Christmas.