Aussie stocks rose alongside others in Asia Pacific, with its biggest gain in two years on Monday being enough for the ASX 200 to log a winning week — a rarity for the region following the slump of the past two days. The index rose 0.4% to 5681.5, leaving it 0.25% higher for the week. Health care climbed 1.8% and REITs advanced 1.4%. But energy and materials each eased nearly 0.5%.
Investors’ retreat from U.S. stocks turned into a stampede, with major indexes suffering declines of more than 4% for the week and their worst start to a December since 2008. Brief optimism over the possibility that the Federal Reserve may slow its pace of interest rate increases gave way to renewed fears about the impact of tariffs on the U.S. economy, spurring an afternoon decline that sent the Dow Jones Industrial Average down more than 550 points. Companies that do business and sell their products overseas, including technology companies like Nvidia and Intel, as well as industrial companies like Deere and Caterpillar, all declined more than 3%. The selloff accelerated after Trump administration officials reiterated they plan to take a tough stand in their 90-day trade negotiations with China or impose further tariffs, reigniting concerns about global trade. The Dow Jones Industrial Average and the S&P 500 opened with slight gains but steadily declined throughout the session as reassuring data on U.S. employment and wage gains in November’s jobs report did little to ease investor jitters. The blue-chip index lost roughly 560 points, or 2.2%, and the S&P 500 declined 2.3%. Both indexes slipped back into negative territory for the year. The tech heavy Nasdaq Composite fell 3%.
Gold prices settled at their highest level since July, after a weaker than-expected U.S. employment number bolstered the case for the Federal Reserve to slow the tempo of its interest rate increases. Gold for December delivery was up 0.7% at $1246.80 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest closing level since July 10. Meanwhile, December wheat rose 14 1/4 cents to $5.19 1/2.
IRON ORE: 65.09s + 1.19 (December contract)
Crude prices gained on a deal to cut production at a meeting of the Organization of the Petroleum Exporting Countries and its allies in Vienna. Light, sweet crude for January delivery rose 2.2% to $52.61 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 2.7% to $61.67 a barrel. Members of the oil cartel, along with non-OPEC producers, agreed to collectively cut production by 1.2 million barrels a day. The news alleviated some pressure on the oil market, which has fallen about 30% from its October highs on a burgeoning supply glut and record crude production.
The U.S. dollar tracked lower, following a cooler-than-expected jobs report and some dovish Fed speak. Commodity-linked currencies meanwhile strengthened after OPEC members and Russia agreed to curb oil production. The ICE U.S. Dollar Index was down 0.3% at 96.548. The November jobs report was called “uninspiring” by economists, after only 155,000 new jobs were created versus the 190,000 expected. The unemployment rate was steady at 3.7%. Later in the session, St. Louis Federal Reserve President James Bullard, who will be a voting member of the Open Market Committee next year, said that the central bank should not raise interest rates next week – a move that has long been anticipated by investors. Bullard joined other Fed speakers in openly worrying about the global economy. Market participants have begun to downgrade their rate hike expectations for next year.
The Stoxx Europe 600 index closed 0.6% higher at 345.45 as European stocks recovered from a two-year low, but concerns about U.S.-China trade tensions limit gains. Germany’s DAX index bucked the trend, ending 0.2% lower as shares in health-care provider Fresenius tumbled 18% after a profit warning. Fresenius Medical Care — partly owned by Fresenius — dropped 8.5% after it said 2019 sales growth and net income would be in line with 2018. Associated British Foods fell 4.6% after it said Primark’s trading was challenging, with other retailers following suit. France’s CAC 40 ended 0.7% higher, the U.K.’s FTSE 100 up 1.1%, Italy’s FTSE MIB up 0.5% and Spain’s Ibex 35 up 0.6%.
There were broad gains to end the week for Asian stocks, but they did little in most markets to reverse the pain of the past few days. Most, aside from Australia and China, logged a weekly decline despite the big gains seen on Monday on fleeting euphoria about the U.S.-China trade truce. But worries on that front quickly returned, highlighted by the market reaction to the arrest of Huawei’s CFO. Benchmarks in Japan and Taiwan, two of the biggest decliners the past two days, rose, with 0.8% gains. Lagging were the Philippines, with a 1% drop, and Malaysia’s main index, which was down 0.3%. The Shanghai Composite was flat and Hong Kong’s Hang Seng edged down 0.4%.