US equities post mixed weekly results
New York: US equities posted mixed results in the past week as investors digested the latest economic data while closely monitoring the latest development of trade issues between the United States and its major trading partners.
For the week, the Dow lost 0.1 per cent, the S&P 500 declined 0.2 per cent, and the Nasdaq erased 0.1 per cent, Xinhua news agency reported on saturday.
On data front, US employers added 266,000 jobs in November, and the unemployment rate dropped slightly to 3.5 per cent, the US Bureau of Labour Statistics reported Friday.
Job gains mainly occurred in healthcare and in professional and technical services, the report showed. The number of people employed in manufacturing rose by 54,000 in November, after a decline in October when General Motors workers were on strike.
In addition, the University of Michigan’s preliminary sentiment index for December increased to 99.2 from 96.8 in November.
The number of Americans filing applications for unemployment benefits unexpectedly fell last week, according to data released by the US Labour Department on Thursday.
In the week ending Nov. 30, the initial claims for state unemployment benefits dropped 10,000 to 203,000 on a seasonally adjusted basis, said the department.
The four-week moving average was 217,750, a decrease of 2,000 from the previous week’s unrevised average of 219,750, said the department.
Private payrolls, however, increased by only 67,000 in November, according to ADP and Moody’s Analytics on Wednesday.
“The job market is losing its shine. Manufacturers, commodity producers, and retailers are shedding jobs,” said Mark Zandi, chief economist of Moody’s Analytics.
He added that if job growth slows any further, unemployment will increase.
In the meantime, US non-manufacturing sector continued to expand in November, the Institute for Supply Management (ISM) said Wednesday.
The non-manufacturing index (NMI), which gauges the performance of the services sector, registered 53.9 per cent in November, which is 0.8 percentage points lower than the October reading of 54.7 per cent, according to the latest Non-Manufacturing ISM Report on Business.
A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of US economic activity. But the figure was lower than Wall Street estimates.
US equities suffered two-day losing streak at the beginning of the week as investors became increasingly concerned about the trade relations between the United States and its major trading partners.
US President Donald Trump announced on Monday that he would “restore” tariffs on steel and aluminum imported from Brazil and Argentina, drawing wide concern domestically and abroad.
Calling the move “unexpected,” Argentine Minister of Production and Labor Dante Sica said “we still don’t know what this implies. We want to know the details and the scope of the announcement.”
The Brazil Steel Institute, which represents the interests of steel exporters, said in a statement that the new tariffs would hurt not only Brazilian companies, but also US steel companies, as they would need the semi-finished products imported from Brazil.
Also on Monday, US Trade Representative (USTR) Robert Lighthizer said he proposed additional tariffs of up to 100 percent on some US $2.4 billion worth of French products.
The USTR said he had completed the first segment of the investigation under section 301 of the Trade Act of 1974 and concluded that France’s digital services tax discriminates against US companies, such as Google, Apple, Facebook, and Amazon.
Market analysts have warned that the relative resilience of US equities is unlikely to last while the country’s aggressive protectionist stance is not likely to change any time soon.
Jonas Goltermann, senior economist at Capital Economics, said in a note Tuesday that “while the proposed new tariffs would have marginal economic impact, and the overall effect on financial markets so far has been limited compared to past episodes of increased US trade aggression, they suggest that President Trump may seek to escalate US protectionism further and widen his set of targets.”
He pointed out that opening new trade war fronts could prove more detrimental to US equities than the conflict with China has been.
US tech firms have a lot to lose if the European Union (EU) were to take a tougher stance on taxing their revenues there, said Goltermann. He added that US investment banks also have a significant market share in Europe and present an easy target for EU regulators.