It may be a new year but it’s the same old story for equity markets which were under the cosh again yesterday, first on the back of the Apple announcement and subsequently following softer than expected manufacturing data in the US. At the end of the day, European stocks shed almost 1.5% with US indices closing 2-3% lower
The decline in core bond yields continued apace with 10-year yields in the US falling by a further 7bps to 2.55%, which brings the cumulative decline from their most recent highs in early November to a substantial 70bps.
The main exchange rates were relatively becalmed. The dollar was a touch softer against the euro and is trading just north of $1.14 against the euro ahead of the latest employment report in the US later today, while the single currency continues to hover around the 90p level against sterling
The ISM index of manufacturing activity in the US fell to 54.1 in December from 59.3 in November, a larger decline than expected by the consensus and the lowest reading in about two years. It’s still consistent with continuing output growth in the sector though at a slower pace than has been the case recently
House prices in the UK fell in December according to the Nationwide index, with the 0.7% decline from November leaving the year-on-year increase at end 2018 at just 0.5%
As mentioned, the employment report in the US is released later today, the consensus expects “payrolls” to have increased by 184,000 in December and the unemployment rate to have remained at 3.7%. A flash reading of inflation in the Euro area is also published this morning, with the headline rate expected to have fallen to 1.7% in December (from 1.9% in November) reflecting the impact of lower oil prices recently