RockCreek Daily Market Update


Equity Markets:
Global equities moved higher on Tuesday, particularly in Asia, as stocks were propelled by talk of further stimulus measures being taken by China. There was a brief hiccup in risk sentiment following the Brexit vote, but moves reversed as investors wrote off the defeat as expected. In the U.S., yesterday’s preference for large cap value reversed as momentum led. On a sector basis, industrials -0.3% and materials -0.7% lagged, while communication services 1.7% and health care 1.7% led.

Bond Markets:
The Treasury curve saw a modest bear steepening. European sovereigns again outperformed as ECB president Mario Draghi said that recent economic developments have been weaker than expected and significant stimulus is still needed, but indicated that “it’s a slowdown, which is not headed toward a recession.”

Currency Markets:
The U.S. dollar index increased 0.4%. British pound was flat on the session but tumbled by -1.9% intraday on the outcome of the Brexit vote before quickly recovering. The havens, Japanese yen and Swiss franc, weakened -0.5% and -0.7%, respectively, as Chinese authorities gave risk sentiment a boost. Euro weakened -0.5% on softer than expected Eurozone trade and German growth data.

Commodity Markets:
The Bloomberg Commodity Index gained 0.5%. WTI and Brent gained 2.9% and 2.6%, respectively, as China boosted risk sentiment and API reported that there was a decline in crude inventories last week. 


In a speech to members of the European Parliament in Strasborg, ECB president Mario Draghi stated that “recent economic developments have been weaker than expected and uncertainties, notably related to global factors, remain prominent” and that a “significant amount of monetary policy stimulus is still needed to support the further build-up of domestic price pressures.” This followed data released earlier in the day that provided further evidence of softening economic conditions in the region. German GDP growth came in at 1.5% for 2018, the weakest level since 2013. The Eurozone’s trade surplus fell to €19.0 billion in November, down from the €23.4 billion seen a year prior. Imports and exports increased 4.7% and 1.9% year-over-year, respectively. 

Theresa May’s Brexit deal was defeated in U.K. Parliament by a vote of 432-202, a result that was largely anticipated.


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