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Breaking financial world news from 25 November, 2019.

Breaking news

Eurozone Composite PMI declines in November

The euro area economy has been on the verge of stagnation for the third straight month, the region’s IHS Markit Composite PMI for November showed. In particular, the index for the 19 euro area countries slipped to 50.3 from 50.6 a month earlier, representing the second lowest reading since July 2013. The Eurozone services PMI declined to 51.5 from 52.2 in October, while the manufacturing PMI picked up to 46.6 from 45.9, remaining below the 50 mark that separates contraction from expansion. New orders decreased for the third month in a row, albeit at a slower pace. Furthermore, employment gains decelerated to a five-year low as companies remain cautious about hiring, while inflation pressure got even weaker. “The eurozone economy remained becalmed for a third successive month in November, with the lackluster PMI indicative of GDP growing at a quarterly rate of just 0.1%, down from 0.2% in the third quarter,” said Chris Williamson, chief business economist at IHS Markit. “Manufacturing remains in its deepest downturn for six years amid ongoing trade woes, and November saw further signs of the weakness spilling over to services, notably via slower employment growth.” To remind, according to the OECD’s updated outlook, the Eurozone economy is expected to expand by 1.2% in 2019 and 1.1% in 2020.

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US CCI at 4-month high

The US Consumer Confidence Index rose from 95.5 in October to a 4-month high of 96.8 in November, University of Michigan (final) data show. The preliminary reading was 95.7, and analysts did not expect any revision on average. The Current Conditions Index dropped from 113.2 a month ago to 111.6 in November, while the Expectations Index for the next six months jumped from 84.2 to 87.3. Inflation expectations of Americans in the medium term (12 months) remained at 2.5%, or the lowest mark since end 2017, while longer-term projections (5-10 years) rose from 2.3% to 2.5%. Economists closely watch consumer confidence indicators because they could hint at potential changes in consumer spending of Americans. Consumer spending has become a more important factor for the economy at the moment when business investment is in decline, experts pointed out. Many of them believe that high consumer spending will allow the country to avoid a recession.

German 3Q GDP ticks up 0.1%

According to the final data from the Federal Statistical Office (Destatis), the German economy expanded 0.1% in 3Q against the previous three months and 0.5% y-o-y, with working-day adjustments. The numbers matched preliminary estimates and analyst expectations. To remind, German GDP dropped 0.2% q-o-q and grew 0.3% y-o-y in 2Q. GDP resumed growth in July-September on the back of consumer and government spending, as well as exports. Exports jumped 1% on the quarter, while imports rose just 0.1%. Consumer and government spending increased by 0.4%, and 0.8%, respectively. Meanwhile, enterprises’ capital investment edged down 0.1%.

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US: Nasdaq tumbles after seven weeks of gains

US benchmarks traded on Friday, November 22, amid a set of macro data that reflected the final reading of consumer sentiment and interim results of business activity indicators in major sectors of the US economy this month.

Overall, macro data looked fairly strong as the University of Michigan Consumer Sentiment Index (final) increased from 95.5 in October to 96.8 in November, also beating the median consensus and the preliminary reading of 95.7. Buying sentiment of Americans and their willingness to spend more improved due to improvements in the economic environment and a largely positive trend in the US labor market.

Market participants were also pleased by initial analysis conducted by market research company Markit regarding activities in major sectors of the US economy in November. The US Manufacturing PMI (preliminary) rose from 51.3 in October to a seven-month high of 52.2 vs. 51.4 expected. A similar trend was seen in the Services PMI (preliminary) that jumped from 50.6 in the previous month to 51.6 in November (vs. 51.0 forecast).

In addition to strong macro, upbeat sentiment was driven by encouraging statements by US President Donald Trump and his Chinese counterpart Xi Jinping. The two leaders reiterated their intention to reach a phase one trade agreement. The confluence of these factors contributed to a positive trend in equities markets, allowing the trio of benchmarks to close in the green. Meanwhile, all stock indices logged weekly losses, snapping a seven-week winning streak in the Nasdaq.

The Dow Jones Industrial Average added 0.39% to 27,875.62, or down 0.5% on the week. The Standard & Poor’s 500 advanced 0.22% to 3,110.29, a weekly drop of 0.3%, and the Nasdaq Composite ticked up 0.16% to 8,519.88, or down 0.25% on the week.

In the blue-chip universe, most liquid names (20 out of 30) landed in the green, with the outperformers led by pharmaceutical giant Pfizer (+1.56%), innovative production corporation 3M (+1.49%), and flagship aircraft manufacturer Boeing (+1.34%). Notable underperformers included leading microchip producer Intel (-1.05%), leading energy company ExxonMobil (-0.43%) and the world’s largest retailer Walmart (-0.42%).

Big athletic apparel and footwear retailer Hibbett Sports soared 14.7% as 3Q financials substantially beat Wall Street projections.

The largest US specialty retailer Gap surged 4.4% after the dismissal of its CEO who ran the company for a number of years and after the management slightly raised quarterly earnings guidance.

Food producer and supplier J.M. Smucker soared 4.1% on robust quarterly financial results that outpaced the median consensus.

The, major tax preparation software developer Intuit plunged 4.2% after guiding for lower-than-expected earnings in fiscal 2Q.

Pure Storage, a developer and supplier of data centers and all-flash data storage hardware and software products, tanked 15.1% as quarterly revenue fell short of the median consensus by a wide margin.

In commodities, December COMEX gold remained unchanged at USD 1,463.60/oz. Gold was little changed on the day as the dollar firmed slightly in the absence of strong catalysts capable of driving the precious metal steadily higher. Gold ended the week 0.3% lower.

January NYMEX WTI slipped 81 cents, or 1.4%, to USD 57.77/bbl. Oil prices dropped following a recent rally as traders opted for profit-taking. Oil ticked up 0.1% w-o-w in the most active contract position given the switch from December to January futures.

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S&P 500

From a technical standpoint, the daily chart shows that the S&P 500 continues to trade within a mid-term rising wedge, with the upper line at 3,130. The 3,030 mark is still the key horizontal support level. Stochastic lines are on the sell side and still far from oversold territory, so we expect the index to extend its correction but not below 3,020-3,030.
Breaking financial world news from 25 November, 2019.

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Europe: benchmarks end on positive note

Key European stock indices landed in positive territory on Friday, November 22 as traders were heartened by the Donald Trump’s latest comments concerning a trade deal with China. According to Trump, the two countries might seal an agreement before long, although China wants it much more than he does.

Chinese leader Xi Jinping reiterated that his country is prepared to make a deal with the US in order to avoid an escalation of the trade dispute. He said that the Chinese government is willing to work for a phase one agreement on the basis of mutual respect and equality.

Friday’s macro data turned out to be patchy. Germany’s manufacturing PMI (preliminary) for November picked up to 43.8 vs. 42.9 projected, while the services indicator decreased to 51.3 compared to the 52.0 consensus forecast. Furthermore, the country’s Q3 GDP (final) stood at 0.5% y-o-y, matching the median consensus. The flash Eurozone manufacturing PMI for November reached 46.6 vs. 46.4 expected after

45.9 a month earlier, while the services index for the same period came in at 51.5, missing 52.5 anticipated after 52.2 in October.

Recapping the benchmarks, the UK’s FTSE 100 advanced 1.22%, the French CAC 40 and the German DAX each firmed 0.20%, while regional barometer STXE 600 closed 0.44% higher at 403.98.

Metals & mining names outperformed the broader market. In particular, BHP Group, Glencore and ArcelorMittal surged 2.40%, 3.10% and 6.62%, respectively.

French media giant Vivendi added 0.4% on reports that it intends to sell a 20% stake in Italian broadcasting company Mediaset in order to settle a longstanding dispute. In the upshot, the latter gained 1.6%.

European lenders were well bid, with HSBC Holdings, BNP Paribas and Commerzbank rising 1.77%, 0.10% and 1.59%, respectively.

European bourses have been on the rise during the first half of trading on Monday, November 25, as investors showed rising optimism for a US-China trade deal. Notably, Chinese authorities said over the weekend that they will stiffen penalties for intellectual property theft, which investors read as a concession to Washington on one of the most controversial issues.

By 9:47 GMT, the UK’s FTSE 100 advanced 0.66%, the German DAX firmed 0.46%, and the French CAC 40 added 0.48%. The regional indicator STXE 600 was 0.73% higher at 406.91.

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The German DAX could see a rising wedge taking shape, with the upper bound at 13,250 and a breakout to the downside. The support level is 13,050. Stochastic lines are on the buy side and slightly above oversold territory, so the index could move towards the upper line of the pattern.

Breaking financial world news from 25 November, 2019.

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Asia: markets kick off the week higher

Asian stock indices turned in mostly positive dynamics on Monday, November 25 as traders regained hopes for a US-China interim trade deal following Donald Trump’s comment that a formal agreement between the two countries is close to being finalized.

Meanwhile, investors continue to keep a close eye on the train of events in Hong Kong. Notably, local elections were held over the weekend, with voters showing strong support for pro-democracy parties, but investors read the news as negative at this point.

On the macro data front, Singapore’s CPI came in at 0.4% y-o-y in October compared to 0.5% projected.

The Japanese Nikkei 225 rose 0.78%, the Chinese Shanghai Composite added 0.72%, Hong Kong’s Hang Seng advanced 1.50%, the South Korean KOSPI firmed 1.02%, and the Australian S&P/ASX 200 closed 0.32% higher.

The S&P/ASX 200 standout advancers included Afterplay Touch Group and Caltex Australia, which soared 7.05% and 6.96%, respectively. Among the decliners, Nufarm and Polynovo tumbled 17.53% and 6.01%.

The Nikkei 225 gainers were led by JFE Holdings and Hitachi Construction Machinery, which surged 4.19% and 4.18%, respectively. Panasonic and Comsys Holdings took a hit, retreating 2.29% and 2.14%.

In Japan, heavyweights SoftBank and Honda Motors outperformed, advancing 2.26% and 1.22%, respectively.

In Hong Kong, insurance services provider AIA Group and real estate developer Wharf Real Estate stood out among the best performers, surging 3.49% and 5.73%.

In the Australian banking sector, Australia & New Zealand Banking, National Bank of Australia and Westpac ended lower, while Commonwealth Bank picked up 0.36%.

Mining giants BHP Billiton and Rio Tinto gained 1.77% and 1.99%, respectively.

Australia’s O&G player Beach Energy edged up 0.86%, tracking oil prices.

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Hang Seng

Technically, the Hang Seng continues to trade within a rising band, with the upper line near 28,450, while the lower line is at 26,200.

Breaking financial world news from 25 November, 2019.

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Commodity markets

Oil prices have been trending higher on Monday amid renewed optimism about the US-China trade talks. Chinese authorities said over the weekend that they will raise penalties on violations of IP rights in the country. Investors read this as a concession to Washington on one of the most controversial issues. US President Donald Trump said in an interview that Washington and Beijing are close to reaching a trade deal. Meanwhile, he noted that the situation surrounding Hong Kong prevents the US from closing the deal with China.

Oil drew additional support from data that US oil producers continue to scale back drilling operations. Oilfield services provider Baker Hughes said in a report that the US rig count dropped by 3 units to 671 last week, extending the contraction to five weeks.

Non-ferrous metals have been flat on the LME. Gold is hovering around USD 1,460/oz

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Breaking financial world news from 25 November, 2019.

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