Weekly Market Update: Stocks Rally into Thanksgiving Break Before Fading on Black Friday
Fri, 29 Nov 01:04 PM EST/06:04 PM GMT
The Santa Claus rally continued this week, with US indices notching new record highs heading into the Thanksgiving break. Sentiment around US/China trade talks continued to be largely optimistic and even the President’s signing of the Hong Kong bill into law did little to sway that, at least initially. A burst of M&A announcements underscored animal spirits while supporting overall equity positioning this week, as well. Friday’s session saw a modest pullback led by weak trade in energy futures. Oil prices dropped 3.5% and natural gas slumped more than 6% ahead of next week’s OPEC+ meeting. Fed Chairman Powell echoed what we continue to hear from a wide array of Fed officials, namely that rates will remain on hold unless there is a significant change to the outlook. The latest reading of the Fed’s Beige Book offered little to suggest the US economy’s trajectory has changed materially. Treasury yields held in a tight range for much of the week before backing up modestly on Friday alongside the selling in equity markets. For the week the S&P rose 1%, the Dow gained 0.7% and the NASAQ added 1.7%.
In corporate news for this holiday-shortened week, Charles Schwab struck a $26B all-stock deal to acquire discount broker TD Ameritrade amid shrinking trade commissions throughout the industry. Novartis announced it would acquire The Medicines Company for $85/shr in cash, ahead of MDCO’s NDA filings for promising cholesterol treatment inclisiran. Tiffany confirmed it will be bought by LVMH for $135/shr in a cash deal valued at $16.2B, one of the largest acquisitions in luxury retail sector history. eBay sold its StubHub ticket seller unit to London-based exchange viagogo for $4.05B in cash, reuniting current viagogo CEO Eric Baker with the US company he co-founded in 2000. Apollo outbid Warren Buffett by reaching a deal to acquire Tech Data for $6.0B. As some earnings continued to trickle in, HPE reported a beat on its bottom line though its top line missed expectations, Dell cut its Rev forecast, citing a PC chip shortage, and VMWare topped consensus on both profit and sales.
MONDAY 11/25 *(DE) GERMANY NOV IFO BUSINESS CLIMATE: 95.0 V 95.0E; CURRENT ASSESSMENT: 97.9 V 97.9E EBAY Confirms sale of StubHub to viagogo for $4.05B in cash *(US) NOV DALLAS FED MANUFACTURING ACTIVITY INDEX: -1.3 V -3.8E (US) Fed Chair Powell: Policy appropriately provided; supporting decisive return to 2% inflation and Fed goals; Reiterates stance that if outlook changes materially, policy will change as well
TUESDAY 11/26 (CN) China Ministry of Finance (MOF) to sell $6B USD-denominated 3-year, 5-year, 10-year and 20-year bonds (as speculated) BBY Reports Q3 $1.13 v $1.04e, Rev $9.76B v $9.73Be VOW3.DE Audi unit said to cut up to 9500 jobs by 2025 as part of labor deal - financial press (US) Nevada reports Oct casino gaming Rev $1.02B, -3.9% y/y; Las Vegas strip Rev $538.5M, -9.3% y/y CNI Teamsters union: normal operations at CN will resume Weds at 06:00 local time across Canada - press *(US) NOV RICHMOND FED MANUFACTURING INDEX: -1 V 5E *(US) NOV CONSUMER CONFIDENCE: 125.5 V 127.0E *(US) OCT NEW HOME SALES: 733K V 705KE (US) Democratic primary Quinnipiac poll: Biden 24% (+3), Buttigieg 16% (+6), Warren 14% (-14), Sanders 13% (-2)
WEDNESDAY 11/27 (EU) ECB President Lagarde: ECB must nurture, sustain trust in euro DTE.DE Reportedly explores merger with Orange - German press *(US) OCT PRELIMINARY DURABLE GOODS ORDERS: +0.6% V -0.9%E; DURABLES (EX-TRANSPORTATION): 0.6% V 0.1%E (US) Atlanta Fed raises Q4 GDP growth to 1.7% from 0.4% (US) Association of American Railroads weekly rail traffic report for week ending Nov 23rd: 521.9K, +10.6% y/y (first rise in 40 weeks) (UK) YouGov MRP Poll reportedly shows significant Tory majority - UK's Guardian *(US) FEDERAL RESERVE BEIGE BOOK: ECONOMY EXPANDED MODESTLY FROM OCT TO MID-NOVEMBER (PRIOR: "SLIGHT TO MODEST") (JP) Japan Investors Net Buying of Foreign Bonds: -¥155.2B v +¥123.4B prior week; Foreign Net Buying of Japan Stocks: ¥131.7B v ¥111.0B prior week
THURSDAY 11/28 *(EU) EURO ZONE NOV BUSINESS CLIMATE INDICATOR: -0.23 V -0.14E *(DE) GERMANY NOV PRELIMINARY CPI M/M: -0.8% V -0.6%E; Y/Y: 1.1% V 1.2%E *(KR) BANK OF KOREA (BOK) LEAVES 7-DAY REPO RATE UNCHANGED AT 1.25%; AS EXPECTED
FRIDAY 11/29 *(DE) GERMANY NOV UNEMPLOYMENT CHANGE: -16.0K V +6.0KE; UNEMPLOYMENT CLAIMS RATE: 5.0% V 5.0%E