- DJIA added 31.27 points, or 0.1% to a record close at 28,267.16.
- S&P 500 put on 1.07 points, or less than 0.1%, to 3,192.52.
- Nasdaq Composite Index added 9.13 points, or 0.1%, at 8,823.36.
Following Monday’s positive performance on Wall Street, where all three major indexes also set new record highs. US stock indexes closed at records yet again on Tuesday, in five straight days of gains for all the three benchmark indexes, despite there being cracks in the geopolitical developments.
The market euphoria is blind to key risks associated with the so-called phase one trade deal between the US and China and the outcome of a Tory victory in the UK elections. Despite them, the Dow Jones Industrial Average, or DJIA, + added 31.27 points, or 0.1% to a record close at 28,267.16, while the S&P 500 put on 1.07 points, or less than 0.1%, to 3,192.52 to also post a record. The Nasdaq Composite Index added 9.13 points, or 0.1%, at 8,823.36 to a record.
Geopolitical risks on the horizon
While the year is ending on a positive note, there should be an air of caution in chasing the bullish tones on Wall Street and in global equities on a whole. Trade deals are expected to continue to be prominent news in the weeks and months ahead, but they will not be made on pink clouds nor paradisiac grounds. While both parties to any trade deal wish for the best outcome for both sides, there are going to be long and tricky negotiations ahead that are bound to throw up all sorts of obstacles.
“Negotiations on a UK-US deal are expected to kick off as soon as Brexit occurs, but Johnson’s move to change the law to guarantee the transition phase isn’t extended past end-2020 ups the ante,” analysts at ANZ explained – More on that here.
As for the so-called, ‘phase-one’ deal which both Beijing and Washington have agreed upon, there are still a number of risks associated to what appears to be somewhat vague agreed details that have been made in principal that do little to satisfy the more pessimistic of observer’s concerns. Like a previous agreement inked this time last year, there are some gaps in what the nations say about the new deal and, in particular, what China has promised to do and how China will ever be able to commit to such volumes of US imports given the global economic backdrop and domestic economic health.
US data
US JOLTS job openings data were stronger than expected. “Capacity utilisation also lifted, reversing the recent downward trend. The number of homes under construction in the US hit a 12.5 year high in November, with housing starts up 3.2% m/m (13.6% y/y). Both the lift in jobs available and housing being constructed are positive signs for the US consumer sector. Industrial production data also lifted in November, as expected. Production of cars, trucks and parts rebounded a massive 12.4% m/m as the GM strike ended. Industrial production, excluding vehicles, was up 0.5% while manufacturing lifted 0.3%,” analysts at ANZ Bank explained.
DJIA levels
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