Stocks still under pressure

Stocks had a torrid time of it in December and 2019 is not starting off well either. While European and US equities recovered from early losses yesterday to end largely unchanged, this is set to prove just a short-lived respite as an overnight warning from Apple about its global sales outlook is likely to take its toll today

In the currency markets, the Japanese yen is the main beneficiary amid the continuing weakness in equities and it is trading at a near 10-month high against the dollar, with the latter firmer against the euro (at just under $1.14) and sterling (at about $1.2550)

Core bond yields continue to head south. The benchmark 10-year yield in the US fell by a further 7bps or so yesterday to close at 2.62%, down a substantial 65bps from its early November high, as the market now believes the Fed is done raising interest rates and is pricing in some (though still small) chance of a rate cut in 2020. Equivalent German yields have fallen to just 0.16%, with UK 10-year yields trading below $1.20

The manufacturing PMI in the UK rose to 54.2 in December, its highest  level since June last year, though this particular silver lining had a cloud as the increase in the index was attributable to companies stockpiling as they ramped up preparations for a disorderly Brexit

Today sees the release of money supply data in the Euro area and the construction PMI in the UK, while in the US the ISM manufacturing index and jobless claims are both due