Major US stock markets ended the session mainly in the red, as the rally caused by the progress in the US-China trade negotiations subsided. Pressure on the indices also had a drop in the quotes of the conglomerate sector.

Market participants also analyzed data on the US labor market, which showed that the number of Americans who applied for unemployment benefits last week fell, and was the strongest in 3.5 years. This may allay concerns about the fact that the recent increase in the number of applications signaled weak spots in the labor market. According to the report, the number of initial claims for unemployment benefits declined by 27,000 during the week of December 2–8, averaging 206,000 with seasonal adjustments. -year minimum, reached in September. It was expected that the number of applications will be 225,000.

Most of the components of DOW recorded an increase (17 of 30). The growth leader was the shares of The Procter & Gamble Company (PG, + 2.67%). The outsider was NIKE, Inc. (NKE, -1.75%).

Most sectors of the S & P finished trading in the red. The most conglomerate sector fell (-1.0%). The growth leader was the utility sector (+ 0.8%).

At the time of closing:

Dow 24,597.38 +70.11 + 0.29%

S & P 500 2,650.54  -0.53 -0.02%

Nasdaq 100 7,070.33  -27.98 -0.39%

That is a sign that forecasters view political uncertainty and the potential for new punitive tariff barriers as greater risks than macroeconomic or financial disruptions.

Nearly half of economists who responded to a survey by The Wall Street Journal, 47.3%, said they viewed the U.S. dispute with Beijing as the No. 1 risk for 2019. Some 20% cited financial market disruptions and 12.7% pointed to a slowdown in business investment.

"The decision to end QE now is more about politics than economics," because it will please ECB officials who have been critical of the bank's bond purchases, particularly its German contingent, said Paul Diggle, an economist with Aberdeen Standard Investments. "If you squint hard enough, the economic data can just about justify the decision."

U.S. stock-index futures rose moderately on Thursday, as investors digested the recent market volatility and took a wait-and-see approach as the United States and China make steps to resolve  their bitter trade dispute.

Global Stocks:

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

Procter & Gamble (PG) upgraded to Buy from Neutral at BofA/Merrill

General Electric (GE) upgraded to Neutral from Underweight at JP Morgan; target $6

U.S. import prices declined 1.6 percent in November, the U.S. Bureau of Labor Statistics reported today, following a 0.5-percent rise the previous month. The November drop was primarily led by lower fuel prices.
The price index for U.S. exports fell 0.9 percent in November, after advancing 0.5 percent in October.

Prices for U.S. exports declined 0.9 percent in November, the largest 1-month decrease since the index fell 0.9 percent in January 2016 and 1.1 percent in December 2015. Lower nonagricultural prices in November more than offset rising agricultural prices. Despite the November decline, U.S. export prices increased 1.8 percent over the past year.

• Balance of risks is moving to the downside

• Measures of underlying inflation remain generally muted but domestic pressures strengthening

• Underlying inflation to increase in medium term

• Blames softer external demand and trade for softer growth outlook

• Governments need to rebuild fiscal buffers

• Reinvestment and enhanced rate guidance to provide support

• Sees somewhat slower growth momentum ahead

• Weaker growth reflects softer external demand

• Inflation will continue to converge

In October, new home buyers in 16 of the 27 census metropolitan areas (CMAs) surveyed saw flat or lower prices. Prices at the national level have remained largely unchanged since November 2017.

New home buyers in Toronto saw prices fall 0.1% in October, while prices were flat in Vancouver. Tighter mortgage regulations as well as provincial interventions, mostly targeting the Toronto and Vancouver housing markets, have likely contributed to the slowdown in new home prices in these historically expensive CMAs.

The pace of new home construction has also slowed in both CMAs. According to the Canada Mortgage and Housing Corporation, single-family housing starts were down year to date in October, compared with the same period in 2017 in both Toronto (-40.3%) and Vancouver (-11.9%). Single-family homes include row, single and semi-detached houses.

In the week ending December 8, the advance figure for seasonally adjusted initial claims was 206,000, a decrease of 27,000 from the previous week's revised level. The previous week's level was revised up by 2,000 from 231,000 to 233,000. The 4-week moving average was 224,750, a decrease of 3,750 from the previous week's revised average. The previous week's average was revised up by 500 from 228,000 to 228,500.

“At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council expects the key ECB interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term”.

• ECB is said to lower 2019 inflation forecast in updated outlook

• Saudi Arabia, UAE Crude Output Hit Historic Highs in Nov

• Says Saudi Output Jumped to 11.06 Million B/D in Nov

• Total Global Supply Fell in Nov. Amid Outages in North Sea & Canada

• IEA Maintains Oil Demand Growth Forecasts for 2018, 2019

• OECD Oil Stocks Rose to 2.872 Billion Barrels in October

The Swiss National Bank (SNB) is maintaining its expansionary monetary policy, thereby stabilising price developments and supporting economic activity. Interest on sight deposits at the SNB remains at –0.75% and the target range for the three-month Libor is unchanged at between –1.25% and –0.25%. The SNB will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration. Since the monetary policy assessment of September 2018, the Swiss franc has depreciated slightly on a trade-weighted basis.

This development is primarily due to the strengthening of the US dollar. The franc is virtually unchanged against the euro. Overall, the Swiss franc is still highly valued, and the situation on the foreign exchange market continues to be fragile. The negative interest rate and the SNB’s willingness to intervene in the foreign exchange market as necessary remain essential. These measures keep the attractiveness of Swiss franc investments low and reduce upward pressure on the currency.

The Producer and Import Price Index fell in November 2018 by 0.3% compared with the previous month, reaching 103.1 points (December 2015 = 100). This decline is due in particular to lower prices for pharmaceutical products. Compared with November 2017, the price level of the whole range of domestic and imported products rose by 1.4%. These are some of the findings from the Federal Statistical Office (FSO).

You will find further information such as tables and graphs in the press releases in German, French and Italian. The English version only includes the lead of the press release.

The selloff follows the release of key inflation data that should still keep the Federal Reserve on track to hike in its upcoming December meeting.

The 10-year Treasury note yield was up 2.7 basis points to 2.908%, cobbling together its third straight session of while the 2-year note yield was flat at 2.774%. The 30-year bond yield was up 1.8 basis points to 3.147%. Bond prices move in the opposite direction of yields.

In November 2018, the Consumer Prices Index (CPI) fell back by 0.2% over a month, after a 0.1% rebound in October. This downturn resulted from that in services prices (−0.3% after a stability in October) and in energy prices (−0.7% after +1.8%). Food prices dropped by 0.2%, as in the previous month, the downturn in fresh food prices being offset by higher prices in other food products. Contrariwise, manufactured product prices rose by 0.1% over a month after a stability in October.

Seasonally adjusted, consumer prices edged down by 0.1% over a month, after a 0.1% increase in October.

Year on year, consumer prices increased by 1.9% in November, after +2.2% in October. This drop in inflation came from a year-on-year slowdown in energy, services, food and tobacco prices, which was barely offset by a lesser fall in manufactured product prices.

The inflation rate – measured by the consumer price index – thus decreased slightly (October 2018: +2.5%). Compared with October 2018, the consumer price index increased by 0.1% in November 2018. The Federal Statistical Office (Destatis) thus confirms its provisional overall results of 29 November 2018.

The increase of energy product prices again had a considerable effect on the inflation rate. Energy prices rose 9.3% in November 2018 on November 2017. The rise in energy prices has continuously accelerated since March 2018. In October 2018, the rate of energy price increase had been +8.9%. From November 2017 to November 2018, price rises were recorded especially for heating oil (+40.7%) and motor fuels (+15.0%). The price increases for other energy products were much smaller (for example, charges for central and district heating: +3.7%; electricity: +1.0%). Gas prices were down on a year earlier (-1.4%). Excluding energy prices, the inflation rate would have been +1.4% in November 2018; excluding the prices of mineral oil products, it would also have been +1.4%.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1518 (661)

$1.1489 (320)

$1.1475 (136)

Price at time of writing this review: $1.1379

Support levels (open interest**, contracts):

$1.1346 (3323)

$1.1312 (6688)

$1.1274 (4659)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date January, 7 is 68119 contracts (according to data from December, 12) with the maximum number of contracts with strike price $1,1500 (7188);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2853 (263)

$1.2830 (113)

$1.2792 (180)

Price at time of writing this review: $1.2659

Support levels (open interest**, contracts):

$1.2592 (2111)

$1.2570 (1369)

$1.2545 (1297)

Comments:

- Overall open interest on the CALL options with the expiration date January, 7 is 31328 contracts, with the maximum number of contracts with strike price $1,3400 (3841);

- Overall open interest on the PUT options with the expiration date January, 7 is 29658 contracts, with the maximum number of contracts with strike price $1,2450 (2794);

- The ratio of PUT/CALL was 0.95 versus 0.96 from the previous trading day according to data from December, 12

* - 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.