Markets largely quiet overnight. Asian and European markets saw marginal declines overnight, while U.S. futures sat near flat. Whatever the political significance of impeachment, financial markets have been largely indifferent, and we expect little impact during the Senate trial in early 2020. Markets continue to focus on the potential for further progress on trade, the earnings outlook, and central banks, and we believe these will continue to be the key themes in 2020.
New unemployment claims fall. This morning’s decline in new unemployment claims provided confirmation that last week’s large jump was just a calendar quirk. New claims fell by 18,000, the most since February 2019, but still came in above economists’ consensus expectation, signaling the seasonal adjustment is likely still having some impact. Thanksgiving came late this year, which is still impacting the data. Overall, labor markets are providing strong support for consumer spending, with the unemployment rate at multi-decade lows and wages showing steady gains.
Emerging market earnings estimates tick higher. The de-escalation in U.S.-China trade tensions this month is clearly positive for the economic and profit outlooks for emerging market countries, particularly China and its key Asia trading partners. Another reason to feel better about the outlook is the recent under-the-radar increase in emerging-market earnings estimates, which we discuss in today’s LPL Research blog. Estimates for the next 12 months for the MSCI EM Index have risen by 2.3% over the past three months, while S&P 500 Index estimates haven’t budged, and MSCI EAFE estimates have fallen by 1% (source: FactSet).
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