17 December 2018 Global stocks tumbled to end the week; A busy week ahead with central bank decisions US markets Stocks moved sharply lower Friday with the Dow Jones industrials and the S&P tumbling to their lowest closing levels in seven and eight months, respectively. The Dow retreated 2.0 percent while the S&P was 1.9 percent lower. Nasdaq dropped 2.3 percent. For the week, the Dow was down 1.2 percent, the S&P declined 1.3 percent and the Nasdaq was 0.8 percent lower.

The declines followed renewed concerns about the global economic growth outlook after disappointing Chinese data for industrial output and retail sales growth. Industrial output grew at its slowest pace in nearly three years, increasing only by 5.4 percent in November after growing by 5.9 percent a month earlier. Meanwhile, retail sales in China grew 8.1 percent in November, the weakest growth since 2003. In October, retail sales were up 8.6 percent. The slower pace of industrial output and retail sales growth was partly due to the impact of the ongoing trade dispute with the US.

November retail sales were up 0.2 percent thanks to a steep drop in gas sales even though underlying retail sales growth remained strong. Core retail sales, which exclude autos, gasoline, building materials and food services, increased 0.9 percent after climbing by an upwardly revised 0.7 percent in October. November industrial production was up 0.6 percent on the month. However, manufacturing was unchanged.

Costco Wholesale dropped after reporting a fall in quarterly gross margin and was the biggest laggard in consumer staples. Walgreens Boots Alliance declined on a broker downgrade. Apple was down with some reports citing a top analyst slashing an iPhone sales estimate for the decline. Johnson & Johnson was the biggest drag after it was reported the company knew for decades that its Baby Powder contained asbestos.

These data reflect observations at 4:00 PM US ET. Gold was down US$6.00 to US$1,241.40. Copper futures were down 0.16 percent to US$2.76. WTI spot crude was down US$1.38 to US$51.20. Dated Brent spot crude was down US$1.17 to US$60.28. The US dollar was up against the euro, pound, Swiss franc and the Canadian and Australian dollars. It retreated against the yen. The yield on the US Treasury 30 year bond was down 3 basis points to 3.14 percent while the 10 year note was down 2 basis points to 2.89 percent.

European markets European stock markets retreated Friday but were mostly higher for the week. On Friday, the FTSE and DAX both lost 0.5 percent, the CAC retreated 0.9 percent and the SMI was 1.1 percent lower. However, for the week, the FTSE added 1.0 percent the CAC gained 0.8 percent, the DAX was up 0.7 percent but the SMI lost 0.3 percent.

Disappointing Chinese economic data weighed on the markets at the start of the day. November industrial output and retail sales were weaker than expected. Reports on industrial production in Germany and manufacturing activity in the Eurozone, France and Germany also contributed to the negative mood among investors.

New passenger car registrations in the European Union declined for a third straight month in November, the European Automobile Manufacturers’ Association (ACEA) said Friday. Demand for new cars fell 8 percent on the year following a 7.3 percent slump in October and a 23.5 percent plunge in September. Flash Composite PMIs, which combines manufacturing and services, fell to a 49-month low of 51.3 from 52.7 in November. December German composite PMI expanded at the slowest pace in four years during December amid slower growth in manufacturing and services. The flash Composite Purchasing Managers' Index fell to a 48-month low of 52.2 from 52.3 in November. French composite PMI slid to 49.3 from 54.2.

LVMH was down after it agreed to acquire Belmond for an equity value of $2.6 billion. Roche dropped along with Nestle and Novartis. The weak Chinese data weighed on shares of the luxury goods companies including Swatch Group and Richemont. Julius Baer, Crédit Suisse and UBS also retreated.

Asia Pacific Markets Asian markets ended lower Friday, hurt by the disappointing pace of November industrial output and retail sales growth in China. Worries about slowing global economic growth along with skepticism about the China and US trade deal weighed as well on Asian markets.

The latest batch of economic data showed China's industrial output grew at its slowest pace in nearly three years, increasing by 5.4 percent in November. Retail sales grew 8.1 percent in November, the weakest growth since 2003. In October, retail sales were up 8.6 percent. The slower pace of industrial output and retail sales growth was due to the impact of the ongoing trade disputes with the US. The Shanghai Composite was down 1.5 percent while Hang Seng tumbled 1.6 percent

The Japanese market ended lower despite a fairly decent Tankan survey report. The Nikkei declined 2.0 percent while the Topix was 1.5 percent lower. Dome along with Yahoo , , and declined. KK, and Isetan Mitsukoshi Holdings moved up. The Bank of Japan said in its quarterly Tankan Survey that the index of business and manufacturing sentiment in Japan was steady in the fourth quarter of 2018. The large manufacturing index was unchanged with a score of +19, beating expectations for +18. The outlook came in at +15, shy of forecasts for +17 and down from +19 in the previous three months. The large non-manufacturing index came in at +24, topping forecasts for +21 and up from +22. The outlook was at +20, in line with forecasts and down from +22. All industry capex is seen higher by 14.3 percent, beating forecasts for 12.8 percent and up from 13.4 percent in the three months prior.

The Australian market ended lower, led by losses in information technology, bank and telecommunications stocks. Both the S&P/ASX and All Ordinaries were down 1.0 percent. Sigma Pharmaceuticals and Australian Pharma Industries jumped. Infigen Energy shares rallied. GWA Group and New Hope Corporation also advanced.

The Kospi was down 1.2 percent while the Sensex as 0.1 percent higher.

Looking forward Central Bank activities Dec 18, 19 United States FOMC Meeting and Announcement Fed Chair Press Conference Dec 20 UK Bank of England Monetary Policy Announcement & Minutes Japan Bank of Japan Monetary Policy Announcement

The following indicators will be released this week... Europe Dec 17 EZ Merchandise Trade (October) Harmonized Index of Consumer Prices (November, final) Dec 18 Germany Ifo Survey (December) Dec 19 UK Consumer Price Index (November) Producer Price Index (November) Dec 20 UK Retail Sales (November) Dec 21 EZ EC Consumer Confidence (December flash) France Gross Domestic Product (Q3.2018) Consumption of Manufactured Goods (November) UK Gross Domestic Product (Q3.2018 final)

Asia Pacific Dec 19 Japan Merchandise Trade Balance (November)

Dec 20 Australia Labour Force Survey (November)

Americas Dec 17 United States Empire State Survey (December) Dec 18 United States Housing Starts (November) Canada Consumer Price Index (November) Dec 19 United States Existing Home Sales (November) Dec 20 United States Philadelphia Fed Manufacturing (December) Initial Unemployment Claims (week ending prior Saturday) Leading Indicators (November) Dec 21 Canada Monthly GDP (October) Retail Sales (October) United States Durable Goods Orders (November) Gross Domestic Product (Q3.2018) Personal Income and Spending (November) Consumer Sentiment (December final)

Global Stock Markets End 2018 Daily Percent Change Index 2017 Dec 13 Dec 14 Change Daily 2018 Yr/Yr United States Dow 24719.22 24597.38 24100.51 -496.87 -2.0 -2.5 -2.2 NASDAQ 6903.39 7070.33 6910.67 -159.66 -2.3 0.1 -0.4 S&P 500 2673.61 2650.54 2599.95 -50.59 -1.9 -2.8 -2.8 Canada S&P/TSX Comp 16209.13 14750.35 14595.07 -155.28 -1.1 -10.0 -9.0

Europe UK FTSE 100 7687.77 6877.50 6845.17 -32.33 -0.5 -11.0 -8.6 France CAC 5312.56 4896.92 4853.70 -43.22 -0.9 -8.6 -9.3 Germany XETRA DAX 12917.64 10924.70 10865.77 -58.93 -0.5 -15.9 -17.1 Italy MIB 21853.34 19048.83 18910.79 -138.04 -0.7 -13.5 -14.4 Spain Ibex 35 10043.90 8926.30 8886.10 -40.20 -0.5 -11.5 -12.5 Sweden OMX Stockholm 30 1576.94 1478.75 1471.67 -7.08 -0.5 -6.7 -7.7 Switzerland SMI 9381.87 8814.70 8713.68 -101.02 -1.1 -7.1 -7.3

Asia/Pacific Australia All Ordinaries 6167.29 5735.25 5678.82 -56.43 -1.0 -7.9 -6.7 Japan 22764.94 21816.19 21374.83 -441.36 -2.0 -6.1 -5.2 Topix 1817.56 1616.65 1592.16 -24.49 -1.5 -12.4 -11.2 Hong Kong Hang Seng 29919.15 26524.35 26094.79 -429.56 -1.6 -12.8 -9.5 S. Korea Kospi 2467.49 2095.55 2069.38 -26.17 -1.2 -16.1 -16.6 Singapore STI 3402.92 3111.08 3077.09 -33.99 -1.1 -9.6 -10.0 China Shanghai Comp 3307.17 2634.05 2593.74 -40.31 -1.5 -21.6 -20.6 Taiwan TAIEX 10642.86 9858.76 9774.16 -84.60 -0.9 -8.2 -6.8 India Sensex 30 34056.83 35929.64 35962.93 33.29 0.1 5.6 7.5 Data Source — Haver Analytics

Bond markets 10-Yr Govt Bonds Closing Yield Change Yield (bp) US 2.89% -2 UK 1.24% -5 Germany 0.25% -3 Japan 0.02% -3 Australia 2.46% 0 Source — Bloomberg

Currencies and commodities Currency Dec 13 Dec 14 Change (%) Japanese yen 113.5900 113.3600 0.2% Australian dollar 0.7228 0.7178 -0.7% Yuan 6.8816 6.9076 -0.4% Euro 1.1363 1.1305 -0.5% British pound 1.2662 1.2587 -0.6% Swiss franc 0.9936 0.9979 -0.4% Canadian dollar 0.7490 0.7478 -0.2% Source — Bloomberg

Commodities Dec 14 Change Brent Spot $ 60.28 -1.90% Gold $1,241.40 ($6.00) Thompson-Reuters/ Jeffreys Commodity index 186.64 -1.48% Source — Bloomberg

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