The US Federal Reserve has smashed all prior records of money creation. Photo: iStock

Trade of the Day: Asian shares mixed as world’s top two economies diverge; oil weakens but Treasuries, gold higher

Quote of the Day: “A phase one deal depends on whether high-level talks [between Lighthizer, Mnuchin and Liu He] can happen in the next few days – if so, a deal can still be reached by Dec 15. If not, then it seems likely that Dec 15 tariffs will be delayed to allow more time for negotiation. In our view, markets are unlikely to take the latter outcome well. It prolongs the headline fatigue and arguably reduces China’s incentive to make concessions as delaying tariffs for the second time would be viewed as weakening President Trump’s negotiating hand,” said Adarsh Sinha, BofA Merrill Lynch strategist, in a report.

Stock of the day:    Logistic company Orient Overseas surged 13% after it declared post market closure on Friday that a special dividend of HK$12.48 per share would be paid to shareholders. The shares rose HK$6.25 to HK$53.50 per share.

Number of the Day:. 30 million. The number of hardware pieces that will need to be replaced in China following Beijing’s directive that all government offices and public institutions remove foreign computer equipment and software within three years.

Tip of the Day:  “We expect that consumer strength and corporate earnings are two main engines of growth for U.S. economy. Going forward, we have optimistic outlook for high-quality companies across all industries that can adapt to digital transformation and leverage innovation and deliver consistent, sustainable growth in an increasingly volatile world,” said Franklin Templeton in its 2020 outlook published on Monday.

Asian markets were flat on Monday after the optimism stoked by the strong US jobs data was offset by downbeat economic numbers from China at the weekend. MSCI’s Asia Pacific index outside Japan rose 0.4% while Japan’s Nikkei index was up 0.3%. Hong Kong’s benchmark Hang Seng index was unchanged with healthcare, consumer cyclicals and utilities in the red, while property, energy and telecom sectors posted gains.

On Friday, the United States reported a blockbuster employment report for November, which smashed analysts’ forecasts and triggered hopes the consumer spending driven economy will continue humming along after wage growth beat expectations. This is a relief for financial markets with the US consumer seen as the one shining beacon in a downbeat global economy where most of the growth drivers are sputtering.  The following day China, whose economy has already slowed to its weakest pace in three decades, reported its exports shrank for the fourth straight month in November.

Investors are edgy ahead of the Dec. 15 deadline when 15% tariffs on about $160 billion worth of Chinese exports to the U.S. are scheduled to go into effect. The US  has placed tariffs on more than $350 billion of Chinese goods and the supply chain disruptions and lack of business confidence have hurt economic growth across the world.  While this may be a defining week for the elusive phase one deal, investors are also cautious ahead of the US Federal Reserve’s meeting on Dec 10-11 and the ECB’s governing council meeting on Dec 12 with the newly appointed president, Christine Lagarde, at the helm. Financial markets expect to hear a confirmation the U.S. central bank will hold rates for the foreseeable future while looking to the ECB press conference for details about Lagarde’s earlier comments on the slowing economy and the interest rate stance.

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