Outside Malaysia

S&P 500 slips on China tension as financial rally takes pause

US stocks slid as a report that China’s navy seized a US drone in international waters in the South China Sea spurred geopolitical concern and financial companies dropped for the third day this week. The S&P 500 Index lost 0.2% to 2,258.07. The Dow fell 8.83 points to 19,843.41.

Fed hawk Lacker says may need more than three hikes in 2017

Jeffrey Lacker, the president of the Federal Reserve Bank of Richmond, warned that the US central bank may have to raise rates more than 3 times next year and said he doesn’t know if policy makers are already behind the curve on inflation. “If we were to see a burst of demand growth, that would suggest a steeper path of rates to maintain price stability,” he said.

US home starts slumped in November after outsize advance

New home construction in the US fell more than forecast in November after surging a month earlier to a nine-year high, indicating fitful progress in residential real estate. Residential starts slumped 18.7% to a 1.09m annualized rate last month after rising to a 1.34m pace, Commerce Department data showed.

Draghi said to warn EU rising global rates pose crisis risk

Mario Draghi warned European leaders that the combination of rising global interest rates and explosive politics could expose the euro area’s underlying weaknesses, even as he painted an upbeat picture of the region’s recovery. The European Central Bank (ECB) president highlighted the votes next year, a slowdown in reforms and some countries’ lack of compliance with budget rules as factors that could threaten the return of conditions reminiscent of the turbulent years from 2010.

UK gets black Friday boost as retail sales unexpectedly rise

UK retail sales unexpectedly rose in November as Black Friday discounts led consumers to splurge on electronics and household goods. The volume of goods sold in stores and online rose 0.2% mom, the Office for National Statistics said. No change was forecast in a Bloomberg survey.

China plans prudent, neutral monetary policy for next year

China’s top policy makers said they plan prudent and neutral monetary policy and proactive fiscal policy next year as they seek to sustain a steady expansion with room for reforms. Preventing and controlling financial risk to avoid asset bubbles will be a priority, along with deepening supply-side structural reform, according to a statement after officials concluded the three-day Central Economic Work Conference.

Japan overtakes China as largest holder of US treasuries

China’s holdings of US Treasuries declined to the lowest in more than six years as the world’s second-largest economy uses its currency reserves to support the yuan. A monthly Treasury Department report showed China held US$1.12trn in US government bonds, notes and bills in October, down US$41.3bn mom and the lowest investment since July 2010. The portfolio of Japan decreased for third month, falling by US$4.5bn to US$1.13trn, according to the data.

Oil rises as output cuts seen curbing glut, dollar rally stalled

Oil rose for the first time in three days after the dollar’s advance stalled and attention shifted back to projected production cuts. Brent for February settlement increased US$1.19 (2.2%) to US$55.21 a barrel.

Source: Affin Hwang Research - 19 Dec 2016