Major US stock indexes fell sharply against the background of declining bank shares, as the collapse in US bond yields made investors think about slowing growth, while industrial and technology stocks fell on skepticism about the chances for a breakthrough in US trade negotiations.

In addition, the rate of business activity in New York worsened in November and was below average forecasts. This was evidenced by a report published by the Institute for Supply Management (ISM) of New York. According to the data, the index, which assesses the economic conditions in the sectors of production and services for companies registered in New York, fell in November to 67.8 points from 69.8 points in October. It was predicted that the index will drop to 69.5 points. At the same time, the index reflecting economic conditions in 6 months rose to 73.4 points from 70.9 points in October.

Separate data showed that the US economic optimism index, calculated by the Investor's Business Daily newspaper and the research firm TechnoMetrica Institute of Policy and Politics, worsened in December, despite the projected increase. The index fell to 52.6 points from 56.4 points in November, and reached a minimum since April. Experts expected it to grow to 57.3 points. The index of economic optimism consists of three main components. This month, all three components have declined. The sub-index of economic prospects - a measure of what consumers think about the prospects of the economy in the next six months - fell to 46.4 points from 53.2 points. The sub-index of personal financial prospects for the next six months fell to 60.8 points from 62.3 points. Meanwhile, the sub-index of confidence in the federal economic policy fell to 50.6 points from 53.7 points in November.

All DOW components recorded a drop (30 out of 30). Caterpillar Inc. shares turned out to be an outsider. (CAT, -6.93%).

All sectors of the S & P finished trading in the red. The industrial goods sector fell the most (-4.4%).

• Fed Doing Very Well in Hitting Job, Inflation Mandates

• Economy Is Doing Very Well, Should Continue Expansion

U.S. stock-index futures fell moderately on Tuesday, as investors reined in their optimism over a breakthrough in the U.S.-China trade war.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Apple (AAPL) downgraded to Hold from Buy at HSBC Securities

This slower growth in productivity reflected the slowdown in business output, while hours worked rose after posting no change in the previous quarter.

Real gross domestic product (GDP) of businesses rose 0.5% in the third quarter, after increasing 0.7% in the second quarter. Output growth in the third quarter was moderated by a decrease in goods-producing businesses (-0.2%), with declines in construction and mining, quarrying and oil and gas extraction. Growth of service-producing businesses (+0.7%) continued at a similar pace as the previous quarter.

Hours worked in the business sector edged up 0.2% in the third quarter, following no change in the second quarter. The 0.5% increase in hours worked in service-producing businesses more than offset the 0.5% decline in goods-producing businesses. Hours worked increased in 9 of the 16 main industry sectors. Arts, entertainment and recreation (+3.1%) and transportation and warehousing services (+1.6%) posted the largest gains. Conversely, agriculture and forestry (-3.7%), real estate services (-1.1%) and the mining, quarrying and oil and gas extraction sector (-1.0%) showed the largest decreases.

• Says Production Cut Is Needed

• Underlying Price Of Sterling Has Not Factored In High Chance Of A Disorderly Brexit

In October 2018, compared with September 2018, industrial producer prices rose by 0.8% in the euro area (EA19) and by 0.7% in the EU28, according to estimates from Eurostat. In September 2018, prices increased by 0.6% in both zones. In October 2018, compared with October 2017, industrial producer prices rose by 4.9% in the euro area and by 5.4% in the EU28.

The highest increases in industrial producer prices were recorded in Belgium (+3.6%), Italy (+1.8%), Romania (+1.6%) and Slovakia (+1.3%)

• Takeaway From Brexit Analysis Is Banks Are Ready

November data pointed to a solid expansion of UK construction output, which was supported by a broad-based upturn in the three sub-categories of activity monitored by the survey. Growth of new work picked up since October and rising client demand underpinned a robust and accelerated expansion of employment. The rate of job creation was the fastest since December 2015. However, business confidence remained relatively subdued, with survey respondents noting that Brexit-related concerns had weighed on their growth projections for the next 12 months.

The seasonally adjusted IHS Markit/CIPS UK Construction Total Activity Index registered 53.4 in November, up from 53.2 in October, to remain above the crucial 50.0 no-change mark for the eighth successive month

The consumer price index (CPI) fell by 0.3% in November 2018 compared with the previous month, reaching 101.8 points (December 2015 = 100). Inflation was 0.9% compared with the same month of the previous year. These are the results of the Federal Statistical Office (FSO).

The 0.3% drop compared with the previous month can be explained by several factors including falling prices for international package holidays and overnight stays in hotels. In contrast, prices rose for diesel and bedroom furniture.

• EU Court Opinion Isn't Legally Binding, Must Be Confirmed by EU Court Ruling in Coming Weeks

• Should Be Some 'Good Faith,' Other Conditions on Unilateral Withdrawal of Article 50 Exit Process

EUR/USD

Resistance levels (open interest**, contracts)

$1.1503 (4468)

$1.1458 (3790)

$1.1419 (2579)

Price at time of writing this review: $1.1381

Support levels (open interest**, contracts):

$1.1336 (5157)

$1.1315 (2351)

$1.1284 (4440)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date December, 7 is 126659 contracts (according to data from December, 3) with the maximum number of contracts with strike price $1,1200 (5777);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2871 (1436)

$1.2833 (1615)

$1.2779 (723)

Price at time of writing this review: $1.2736

Support levels (open interest**, contracts):

$1.2700 (2174)

$1.2681 (1331)

$1.2654 (3330)

Comments:

- Overall open interest on the CALL options with the expiration date December, 7 is 59313 contracts, with the maximum number of contracts with strike price $1,3500 (4719);

- Overall open interest on the PUT options with the expiration date December, 7 is 46707 contracts, with the maximum number of contracts with strike price $1,2700 (3330);

- The ratio of PUT/CALL was 0.79 versus 0.79 from the previous trading day according to data from December, 3

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

A negative start to trading in European stock exchanges is expected, as doubts start to arise as to whether the United States and China will be able to resolve their differences.

As the yuan rose further as well, the Shanghai Composite climbed 0.4%, as did the Shenzhen Composite and startup-heavy ChiNext. Helping both asset classes have been pep talks from official media. Airline stocks rose more than 3% today while shell companies and venture-capital firms were back under the spotlight. Hunan TV & Broadcast and Chaohua Technology logged limit-up gains today. - WSJ

• Some Market Segments More Active Than Feared Before TRACE Data Collection

• Dealers Still Intermediate Majority of All Treasury Trading Activity, Data Show

• Proprietary Trading Firms Still Occupy Important Place in Treasury Market

• Markets Have Weathered Short-Term Turbulence Well in Recent Years

• Market Turbulence Without Clear News Drivers Remains a Concern

• FINRA Would Act as Fed's Agent to Expand Data Collection to Key Banks

• Important That Reporting Thresholds Be Tailored, Avoid Undue Burden on Small Firms

• Important Potential Benefits to Making Treasury Market Data Public

• Treasury Market Has Adapted Well to Post-Crisis Regulatory Regime

Balance of payments:

• The current account deficit, seasonally adjusted, fell $1,368m to $10,688m in the september quarter 2018. The balance on goods and services surplus rose $2,704m to $6,607m. The primary income deficit rose $1,162m to $16,911m.

• In seasonally adjusted chain volume terms, the surplus on goods and services rose $1,603m from $1,250m in the june quarter 2018 to $2,853m in the september quarter 2018. This is expected to contribute 0.4 percentage points to growth in the september quarter 2018 volume measure of GDP.

International investment position (IIP):

• Australia's net IIP liability position was $940.2b at 30 september 2018, a decrease of $17.3b on the revised 30 june 2018 position of $957.5b. Australia's net foreign equity asset position increased $29.9b to $103.9b at 30 september 2018. Australia's net foreign debt liability position increased $12.6b to $1,044.0b.

“At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

The global economic expansion is continuing and unemployment rates in most advanced economies are low. There are, however, some signs of a slowdown in global trade, partly stemming from ongoing trade tensions. Growth in China has slowed a little, with the authorities easing policy while continuing to pay close attention to the risks in the financial sector. Globally, inflation remains low, although it has increased due to the earlier lift in oil prices and faster wages growth. A further pick-up in core inflation is expected given the tight labour markets and, in the United States, the sizeable fiscal stimulus.

Financial conditions in the advanced economies remain expansionary but have tightened somewhat. Equity prices have declined and credit spreads have moved a little higher. There has also been a broad-based appreciation of the US dollar this year. In Australia, money-market interest rates have declined, after increasing earlier in the year. Standard variable mortgage rates are a little higher than a few months ago and the rates charged to new borrowers for housing are generally lower than for outstanding loans.

The Australian economy is performing well. The central scenario is for GDP growth to average around 3½ per cent over this year and next, before slowing in 2020 due to slower growth in exports of resources. Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low, debt levels are high and some asset prices have declined. The drought has led to difficult conditions in parts of the farm sector”.