Trade Outlooks Swings into Positive Territory

21 November, 2019

After what has been a lackluster day for equities in Asia and Europe where indices spent most of the Thursday trading session in the red, U.S. equities are inching higher and bonds are losing ground as investors and traders react to the latest on the U.S./China trade negotiations.

China’s chief trade negotiator and Vice Premier, Liu He, was quoted as saying he was cautiously optimistic of the “phase one” trade deal, which the markets have been expecting. 

The stock exchanges were also buoyed by a report that the U.S. may delay the implementation of the Dec. 15 tariff hikes if a trade agreement is not reached by then. The Euro and the Pound strengthened against the dollar, rising by 0.2% and 0.3%, respectively.

Canadian Capital Growth Slumps

Canada extended its weakest record of capital growth, outside the housing sector, after experiencing another year of bad investment numbers. The value of nonresidential capital stayed sluggish for the third consecutive year, posting a mere 1% growth in 2018.

At the other end of the spectrum, housing related capital, which includes the cost of construction, renovation, and ownership-related costs gained by 2.8% within the same time period, further increasing the gap between the two types of capital.

Canada has been impacted by both the contraction in energy investments due to lower commodity prices and transportation issues. Moving forward in the near-term, observers expect business investment to not act as a leading growth driver for the economy.

U.S. Sees Signs of Labor Market Softness

Jobless benefit claims numbers last week were reported at 227,000 surpassing the estimated 218,000 expected and the previous week’s reading was revised upwards by 2,000, according to the U.S. Labor Department. The latest indication pushed the four-week average to 221,000, also pointing to an increase to the highest levels seen since June.

The updated figures contrast with Chairman Powell’s description of the U.S. Labor market, which he described as strong and healthy only a week earlier and could fuel anxiety among traders given what could be the early signs of an economic peak.

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