The U.S. economy expanded 2.1% in Q4 according to the second estimates, same as in Q3. Contribution from net
trade was revised higher while PCE rose less than initially estimated. For the full-year 2019, the economy advanced
2.3%, missing the government’s target of 3.0%.
Q3 GDP grew in line with consensus:
The U.S. economy expanded 2.1% (annualized) in Q3 after a 2% expansion in Q2. Personal consumption expenditure
increased 1.5%, federal government spending, residential investment, exports also increased.
Personal spending continues to rise:
Personal spending increased 0.4% m/m in November, following a 0.3% gain in October. This was boosted by an increase in purchase of motor vehicles and increased health care spending.
Yesterday,
European markets closed in the red after U.S. President Donald Trump restored tariffs on metal imports from Brazil and
Argentina and threatened to increase levies on Chinese goods if a trade deal between the two countries is not
concluded before December 15.
President Trump also threatened to impose tariffs on imports from France if it goes ahead with the digital tax, causing
France’s CAC to lose more than 2% on high volume.
The Stoxx 600 was down more than 1.5%, with all the sectors trading in the red. Automobiles, Banks, and Chemicals were
the worst performers. Banks were down more than 1%.
Among other major indices, Germany’s DAX was the worst performer and lost more than 2% on high volume, owing to
political uncertainty after the government’s coalition partner SDP elected left inclined leaders.
The U.K.’s FTSE lost more than 0.8% on high volume, faring better than other markets as the pound dropped after
the Labor Party bridged its gap against conservatives.
All the 17 indices that we track closed in the negative territory, with all of them witnessing distribution days. Spain was
downgraded to a Downtrend after it slipped below its 50‐ and 200‐DMA, while Finland and Portugal were downgraded to
an Uptrend Under Pressure after they breached key support levels.
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq closed below their respective 10-DMA for the first time since early October. Distribution increased to three days each, though one expires on the S&P 500 Thursday. Support is now the rising 21-DMA (S&P 500 3,101; Nasdaq: 8,506).
European markets were down as investors continued to keep a tab on the U.S.-China trade war developments and a slew of economic data coming in.
The Stoxx 600 was down more than 0.4%, recording its fourth distribution day. Almost all sectors closed negative. Banks, Automobiles, and Construction & Materials were the biggest decliners with Autos losing more than 1%. Banks declined more than 0.8%.
Among other bourses, France’s CAC declined more than 0.1% on higher volume while Germany’s DAX was flat on better-than-expected unemployment rate. The U.K.’s FTSE recorded a distribution day and lost more than 0.9%.
All the countries except Luxembourg closed in negative territory with Denmark, Finland, Sweden, Switzerland, and Italy, recording a distribution day each. Norway was downgraded to an Uptrend Under Pressure after it breached its 50-DMA.
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq made new all-time highs last week as both continue to trend higher off their respective 10-DMA. Distribution remains low at two days each, with one expiring on the S&P 500 this week. We expect the market to consolidate gains in the coming days given the sharp move higher over this past week. Should that occur, look for underlying action among quality growth ideas to remain constructive.
Q3 GDP growth beats consensus in advance estimates:
The U.S. economy expanded 1.9% (annualized) in Q3, beating the consensus by 30bps. However, this was below Q2
expansion of 2%. Personal consumption expenditure increased 2.9%, federal government spending advanced 3.4%
and residential fixed investment and exports also increased.
The U.S. market is now in a Rally Attempt. The S&P 500 and Nasdaq held Thursday’s low ( S&P 500: 2,855; Nasdaq: 7,700 ) for three sessions. The market will be upgraded to a Confirmed Uptrend should a follow-through day occur. A follow-through day is a booming gain on heavier volume than the day before and is a vital second confirmation that an attempted rally is working. Successful follow-through days generally show instant progress and are coupled with a multitude of quality ideas emerging from consolidation.
Yesterday, European markets closed higher on the back of defensive shares ahead of the upcoming trade talks between the
U.S. and China and Brexit negotiations. France’s CAC and Germany’s DAX were up 0.61% and 0.70%, respectively, on lower
volume. The U.K.’s FTSE 100 rose 0.59% on lower volume.
The Stoxx 600 was up 0.71%, with a higher volume.
Sectors that gained the most include Food & Beverages, Technology, and Chemicals
All countries closed in positive territory.
On Friday, most European markets closed in the green on the back of modest U.S. jobs growth. However, it was the worst week of the year, with the Stoxx 600 losing about 4% due to poor economic data from the EU and the U.S. as well as trade war between the two regions. Germany’s DAX was up 0.73%, France’s CAC 40 rose 0.91%, and the U.K.’s FTSE 100 gained 1.10%, all on lower volume.
The Stoxx 600 closed 0.71% higher, on higher volume.
Sectors that gained the most include Food & Beverages, Health Care, and Technology.
All countries except Luxembourg closed in positive territory.
