10 things you need to know before the opening bell

Good morning. Here’s what you need to know:

  1. Chinese manufacturing activity was below expectations in November. The official purchasing manager’s index (PMI) was 49.6, missing expectations for an unchanged print of 49.8. A reading below 50 indicates contraction. The non-official Caixin-Markit reading rose 0.3 points to 48.6 (48.3 expected). A stabilisation of output volumes, and export orders expanding at the fastest pace in 13 years, inched up the index, although domestic demand was still weak according to Markit. The services sector was more robust, with the non-manufacturing PMI at 53.6, the highest level since July.
  2. Germany’s unemployment rate fell to a record low last month. The rate fell to 6.3% from 6.4%. The Bundesbank said Germany’s economic momentum was “quite strong”, and the labour market was driving domestic demand even though exports were slowing down, according to Bloomberg.
  3. South Korean exports dropped 4.7% in November year-on-year. This was better than the expected 9% plunge. Korean exports essentially represent the world’s imports, and the data are based on hard transactions instead of surveys. The headline bump was boosted by a jump in exports of shipping vessels (totaling $2.19 billion of $44.4 billion), which Barclays economists speculated was because of a large order from a European country.
  4. Barring a major drop in December, US auto sales are set for a record year. The latest data from the big carmakers are due today, and the forecast is for growth at an annualized pace of 18.10 million vehicles, according to Bloomberg. The prior annual peak was set in 2000 at 17.4 million. Sales are being driven by an ageing fleet that needs replacement, cheap gas, easier credit, and the availability of jobs, among other things.
  5. The Chinese yuan is now a global reserve currency. The International Monetary Fund made it official on Monday, placing the yuan alongside the dollar, yen, euro, and pound in the Special Drawing Rights (SDR) basket. It will make up 10.92% of the basket, slightly lower than the 14% to 16% estimate previously made by IMF staff. IMF managing director Christine Lagarde said the yuan’s inclusion was “a clear indication of the reforms” China has implemented. This could benefit the yuan, as big money managers move their holdings to the currency.
  6. Morgan Stanley may layoff a quarter of its fixed-income trading staff within the next two weeks, according to Bloomberg. The investment bank’s bond-trading revenues fell 42% year-on-year in the third quarter, and CEO James Gorman described it as the worst three months for fixed income, currencies, and commodities since he took the position in 2010.
  7. Mattress Firm is buying its rival Sleepy’s for $780 million. The deal would make the new company the country’s largest specialty retailer of mattresses, and is expected to close during the first half of fiscal 2016. The combined company would operate about 3,500 stores in 48 states, and achieve cost savings of about $40 million by the third year from the deal, Reuters reported.
  8. The Cyber Monday sales estimates are trickling in, and they’re looking good. Adobe Digital Index estimated that sales were up 12% year-on-year to $2.98 billion. The websites of Target, PayPal, Walmart, and Victoria Secret, among a few others, experienced periodic outages or slow checkout times. In a press release, Amazon said the holiday weekend was the best ever for its own devices.
  9. Global stock markets are mostly green. At 7:00 a.m. ET, China’s Shanghai Composite was up 0.36%, or 12 points, while the Euro Stoxx 50 was up 0.1%, or 5.5 points. Germany’s Dax was down 7 points, or 0.08%. Dow futures were up 72 points.
  10. Besides auto sales, US manufacturing PMIs from ISM and Markit, and construction spending numbers, are due this morning. The American Petroleum Institute’s weekly inventories data are expected after the close.

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