December Markets In Brief

November saw Brexit put on hold while the UK braced itself for a December election, and the US/China trade dispute intensified with more threats from both sides.

What did world stock markets make of all this? Perhaps surprisingly, the majority of them were up in November, with the US market leading the way. Let’s look at all the details…

UK

Mothercare appointed administrators to 79 UK stores, putting 2,500 jobs at risk. Marks and Spencer’s profits were down due to poor clothing & home sales and Clinton Cards is in survival talks with its landlords. On top of all this, Sainsbury’s half year profits fell by 92% as the cost of store closures took its toll on the balance sheet and P&L account.

The UK economy grew by 0.3% in the 3rd quarter of the year, according to figures released by the Office for National Statistics. The ONS highlighted construction and services as sectors which had contributed to the growth, but City AM was soon reporting that construction had contracted in October, with the Purchasing Managers’ Index for the month registering a score of just 44.2 (with any score below 50 showing a contraction).

It was good news for British Steel which is to be rescued by the Chinese firm Jingye. They will invest £1bn into the company and safeguard 4,000 jobs. Unemployment fell to 1.31m in the three months to September. And inflation was down to 1.5% – although wages growth has also slowed, down to 3.6% compared to 3.8% in the previous month.

House price growth also hit a seven month high, but November ended on a gloomy note as restructuring at Npower threatened 4,500 jobs and Crossrail was once again delayed – this time to 2021 as the cost of the project increased yet further.

Ahead of the General Election, the FTSE100 index of leading shares was in a cautious mood. It ended November up just 1% at 7,347 while the pound was virtually unchanged against the dollar. Having started the month trading at $1.2944, it closed the month at $1.2934.

Europe

Germany managed to avoid going into a technical recession when it posted growth of 0.1% for the third quarter, but the second quarter growth figure was revised downwards to minus 0.2% – meaning that Europe’s largest economy has not grown for six months.

Unsurprisingly, a survey by accountancy firm Deloittes found that 35% of Europe’s chief financial officers were more gloomy about their respective company’s prospects than they had been three months ago.

But there was some good news for Europe in general and Germany in particular when US car maker Tesla chose Berlin for its first European factory. “Berlin rocks,” said Tesla boss Elon Musk, declaring that production would start in 2021.

There was also good news for European aircraft manufacturer Airbus (the wings are made in the UK) which won a $30bn (£23bn) order for 170 aircraft at the Dubai airshow.

Both the German and French stock markets rose by 3% in November, to end the month at 13,236 and 5,905 respectively.

US

There was good news for the overall US jobs market. Figures released at the beginning of the month showed that 128,000 new jobs had been added in October against forecasts of 85,000. However, the unemployment rate edged up slightly to 3.6%, from September’s 50 year low of 3.5%.

In company news, the ubiquitous fitness tracker Fitbit was bought by Google, as the search engine giant became the latest tech company to move into banking. It has partnered with banks and credit unions to offer ‘smart checking accounts’. So the good news is that you’ve done your 10,000 steps for the day: the bad news is that you’re overdrawn…

The Dow Jones index rose by 5% to end November at 28,051 – up an impressive 20% for the year as a whole.

Far East

Protests meant that Hong Kong entered its first recession for a decade, with the economy shrinking by 3.2% in the July to September period compared to the previous quarter.

It was a relatively quiet month on the overall region’s stock markets. Both the Chinese Shanghai Composite index and the Hong Kong market were down 2% at 2,872 and 26,346 respectively, while the South Korean market was up just five points at 2,088. Japan’s Nikkei Dow index was up 2% to 23,294.

Emerging Markets

Saudi Aramco, Saudi Arabia’s state owned oil producer, is to go public and is thought to be worth around $1.2tn (£927bn). Between 1% and 2% of the company’s shares will be made available on the Riyadh stock market, with the company saying it currently has no plans for an international listing.

While the Riyadh stock market geared up for the excitement of the launch, the Indian, Russian and Brazilian markets all moved fractionally upwards in November. India led the way with a rise of 2% to 40,794 while the Russian and Brazilian markets were both up by 1% to 2,935 and 108,233 respectively.

And that’s it from us until January. We would like to take this opportunity to thank you for reading our Commentary throughout the year and to wish you a very happy Christmas, and a healthy and prosperous New Year.