Leading equity markets around the globe gained in November, lifted by signs of progress towards a ‘phase-one’ trade deal between the US and China and by stable manufacturing indices. This boosted cyclical sectors such as industrials and tech stocks. At the same time, financials were supported by the uptick in long-term bond yields, however minor this may have been.

Back to trade. News has it in the Chinese press that the ‘phase-one’ deal will soon be signed, on the condition that the US postpones the introduction of the customs duties planned for 15 December. These are due to affect USD 160 billion worth of imports. Donald Trump is adamant that the deal is on its home straight. That having been said, his backing of the pro-democracy demonstrators in Hong Kong has stoked tensions between the two countries, whereby the decision-making could be postponed to 2020. Besides, the mechanisms for implementing a deal are still lacking.

It is now estimated that the US economy’s GDP grew by 2.1% year on year in the third quarter instead of the previously estimated 1.9%. Separately, Fed boss Jerome Powell again stated that after three rate cuts this year, monetary policy is well calibrated for allowing the economic upcycle to continue. In Germany, the Ifo business climate survey produced a reading of 95.0, up slightly relative to October (94.7). In Switzerland, GDP was better than expected, rising by 0.4% in the third quarter and 1.1% year on year.

In China, the official PMI reading for November took the market by storm, clocking in at 50.2 (versus the expected 49.5). This was the first time above the 50 mark since April. The manufacturing PMI was 54.4, beating the forecast 53.1. A series of easing measures put into action by the People’s Bank of China (such as the lower rate charged on the one-year lending facility) have given the economy more wiggle room, and this is helping consumer spending and business investment. Expect perhaps slightly quicker growth in 2020, which should in turn support Chinese equities.
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