Continued recovery in US manufacturing | Flow Traders Investment Competition | Week 10

Little change in the markets this week, with the S&P 500 increasing by a mere 0.01 percent, and the AEX gaining only 0.16%. Eurostoxx 50 and Nasdaq, on the other hand, both decreased this week, losing  -0.07 and -0.12 percent respectively. The Dow Jones Industrial Average ended up with a 0.35 percent increase this week, while the VIX also gained by 10.4% during last week.

In the US, figures show a continued recovery in the manufacturing sector and a drop in the number of unemployment claims. The positive news came at the same time that president Trump announced him signing the first phase of a new trade deal with China, which apparently gave a lift to US stock markets. A sustained improvement in factory output was supported by a solid rise in new business and a further upturn in production, according to the US manufacturing purchasing managers’ index (PMI). Although manufacturing might be doing well, the general consumer confidence dipped in December. The percentage of consumers judging that business conditions are good remained unchanged at around 39 percent, while the consumers’ outlook on the job market soured. The chances of growth, in particular consumer spending, are very slim in early 2020 due to lower consumer confidence.

In the UK the PMI suggests that the manufacturing sector isn’t doing that well, remaining 50.6 in December, just above the 50 mark which separates expansion from contraction. The Eurozone isn’t doing that much better either, with businesses struggling against near-stagnant demand. Due to the tensions between US and Iran, after the killing of the top military commander of Iran by a US airstrike, European stocks declined today, with investors avoiding riskier assets like equities in favor of safer alternatives like gold and bonds. France is currently suffering the longest strike in more than 30 years. The open-ended strike is an attempt by the public sector workers to show their dissatisfaction with the government’s plan to alter the current pension system, albeit the prime minister Philippe saying it will be a very gradual process. Recent reports show Greece, Russia and Italy to have the top performing stock markets in 2019, with Greece’s main index rising a whopping 43% last year, followed by Russia with 29 percent, and Italy having a 28% increase in 2019.

Looking ahead, in the upcoming week major investment banks like J.P. Morgan, Goldman Sachs and Citigroup will share their fourth quarter earnings, along with an ample amount of other banks and major asset managers like Blackrock and Charles Schwab.

On to the Flow Traders Investment Competition, where Omega Investments is still holding on to their first place with a 7.01 percent M2, followed by MBA investors with an M2 of 6.61%. The investment groups dropping the most places this week are Turbo Traders and Fides Investments, both dropping 11 spots and ending up 22nd and 29th respectively. The largest gainers this week are CFQ and B.R.O.O.D. Beleggers, both gaining 10 spots this week, and ending up in 10th and 32nd place respectively. CFQ also had highest weekly return with 1.23%.

Sebastian Cornielje