Investing.com -- Markets start the week on a strong note, helped by surveys showing manufacturing activity ticking up around the world and U.S. consumers bingeing more than ever before on online holiday season promotions. Germany's government is coming apart at the seams, and Saudi Arabia is pushing its OPEC allies and Russia to make deeper cuts to oil production next year as it tries to ensure a favorable backdrop for its IPO of national champion Saudi Aramco. Here's what you need to know in financial markets on Monday, 2nd December.
1. Manufacturing surveys improve, but China cautions
Purchasing manager indices from around the world ticked up in an apparent sign that the world economy is stabilizing after a sharp slowdown this year in the shadow of the U.S.-China trade war and Brexit.
However, any optimism was held in check after China’s central bank governor Yi Gang published an article warning that the slowdown was likely to be protracted, and that China should steer clear of extraordinary monetary stimulus programs. In addition, Hong Kong said that retail sales fell 24.3% by value in October, the worst drop on record and the fourth straight month of double-digit declines.
Separately, Beijing said it would suspend the right of U.S. warships to dock in Hong Kong, in the latest of a string of largely symbolic countermeasures to the passage of the U.S.’s Hong Kong Human Rights and Democracy bill.
2. Online shopping frenzy sets new records
U.S. shoppers are poised to make today the biggest-ever day for online shopping in the U.S., with an estimated $9.4 billion in purchases, up 19% from last year, according to Adobe (NASDAQ:ADBE) Analytics.
That comes on top of what an estimated $4.2 billion in online sales on Thanksgiving day and $7.4 billion in online sales on Black Friday, both of which also constituted records, according to Adobe (NASDAQ:ADBE).
Adobe (NASDAQ:ADBE) Analytics measures transactions from 80 of the top 100 U.S. online retailers. The figures suggest that overall spending remains buoyant, although there is no immediate clarity on how far online sales have cannibalized sales at physical stores.
3. Stocks hit new highs overnight
U.S.stock markets are poised to open at new record highs on Monday, supported by the seemingly strong retail performance over the holiday weekend and the improvement in global manufacturing surveys.
The S&P 500 Futures contract hit a new all-time high of 3,157.62 overnight before retracing slightly to trade at 3,151.62 by 6:15 AM ET (1115 GMT), a gain of 0.3% from late Friday. Dow futures and Nasdaq 100 futures lagged slightly, up 0.2%.
Asian and European markets had also traded higher overnight.
Walt Disney (NYSE:DIS) was set to be supported by another record-breaking weekend for Frozen 2, which grossed another $123.7 million over the holiday weekend in the U.S. and Canada. It’s now made $738.6 million globally in the two weeks since it opened, and is well on course to gross over $1 billion. The Wall Street Journal cited Comscore data as suggesting that Frozen 2’s performance would narrow the gap between this year’s overall box office takings and 2018’s record numbers.
4. Merkel's coalition nears fatal rupture
Germany’s government lurched closer to breaking up after the center-left Social Democratic Party elected a new leadership at the weekend, with an eye to ramping up spending to sharpen its profile vis-a-vis Chancellor Angela Merkel’s Christian Democratic Union.
The yield on the German 10-year benchmark bond rose to a three-week high of -0.27%, before falling back slightly, as the market anticipated a shift to a more expansive fiscal position.
The CDU, which is the senior partner in the current coalition in Berlin, has said it won’t abandon its policy of balanced budgets, but the SPD’s move adds a further source of domestic political pressure to pump up spending, adding to repeated calls from the European Central Bank and International Monetary Fund.
5. Saudi leans on allies for deeper output cuts
Crude oil prices rose after a Reuters report claiming that Saudi Arabia will push for deeper production cuts from Russia and OPEC members when they review their current deal on output restraint at the end of the week.
Reuters said Saudi Arabia wants its partners to agree to hold another 400,000 barrels a day of output back from world markets, in addition to the 1.2 million b/d currently withheld. Reuters said the kingdom wanted to keep prices firm while the initial public offering of Saudi Aramco moves toward its conclusion.
The IPO will be priced on Dec. 5, the same day OPEC meets in Vienna. The OPEC+ grouping – which includes Russia – is due to meet on Dec. 6. Russia has so far opposed deeper cuts and signalled it wants exemptions for its output of condensate, which is due to rise next year as new gas fields come online.
By 6:30 AM ET, Brent futures were up 2.1% at $61.77 a barrel, while U.S. crude futures were up 2.2% at $56.36.
By 6:30 AM ET, Brent futures were up 2.1% at $61.77 a barrel, while U.S. crude futures were up 2.2% at $56.36.