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Top 5 Things to Watch in Markets on Dec. 17

Investing.com -- Boris Johnson abruptly ends his honeymoon with the markets by reviving the threat of a no-deal Brexit at the end of the year, FedEx reports earnings a day after being spurned by Amazon and housing starts data for November will show the reality behind record-breaking levels of confidence among homebuilders. Plus Boeing's decision to halt production of the 737 MAX hits aerospace suppliers around the world. Here's what you need to know in financial markets on Tuesday, 17th December.

1. Same old Boris

The British pound slumped as Boris Johnson put the risk of a no-deal Brexit firmly back on the table. U.K. media reported a source in Downing St. as saying that the government will change the law to make it impossible to extend the transition period after Brexit, which is set to end at the end of 2020.

Michael Gove, a senior ally of Johnson, said the aim was to “concentrate minds” rather than reintroduce the ‘cliff-edge’ scenarios that had spooked markets for most of this year. However, the EU’s chief negotiator Michel Barnier, has said it will be impossible to negotiate a comprehensive trade deal by then.

By 6:10 AM ET (1110 GMT), the pound had recovered to $1.3203, having fallen as low as $1.3159 initially. That’s around 0.4% above where it was before the Conservatives’ election victory was confirmed last Thursday.

2. U.S. housing starts, industrial production due

It’s a heavy data for U.S. economic data, and markets will be looking for hard data on building permits and housing starts in November (due at 8:30 AM ET or 1330 GMT) to corroborate the exuberance of the latest survey from the National Association of Home Builders. The NAHB survey index, released on Monday, rose to its highest in 20 years, against a backdrop of high employment, solid wage growth and low mortgage rates.

Housing starts have been running at their highest in a decade in recent months but are still well below pre-crisis levels.

Other data due later include industrial and manufacturing production for November at 9:15 AM and the JOLTS job openings survey for October at 10 AM.

There are also public appearances by Dallas Fed President Robert Kaplan at 8 AM, and his New York and Boston colleagues Eric Rosengren and John Williams at 12:30 PM.

3. Stocks set to open lower

U.S. stock markets are set to open slightly lower on the back of Boris Johnson’s unpleasant surprise for European markets, with Boeing's (NYSE:BA) decision to halt production of the 737 MAX in January also rippling through markets.

By 6:10 AM ET, Dow futures were down 64 points, or 0.2%, while S&P 500 futures were down 0.2% and Nasdaq 100 futures were down 0.1%.

Aerospace stocks in Europe suffered overnight as the companies in Boeing’s supply chain came under a harsh spotlight. France’s Safran (PA:SAF) fell 3.5% and U.K.-based Rolls Royce (LON:RR) fell 1.8%, while smaller suppliers such as Senior PLC (LON:SNR) fell 8.5%.

4. FedEx-Amazon spat to liven up courier's earnings

What a day for FedEx to be reporting earnings. It emerged on Monday that Amazon.com (NASDAQ:AMZN) has banned third-party sellers from using the logistics company’s ground services for deliveries to Prime customers because, it claims, it is too slow.

The move shows Jeff Bezos’ company forcing the pace of its separation from FedEx (NYSE:FDX), as it builds up its own logistics operations. The news will attach more significance to management’s outlook for 2020.

FedEx is due to report its fiscal second-quarter earnings after the bell. Analysts expect earnings per share of $2.82, down some 30% from a year earlier, on a marginal decline in revenue to $17.6 billion.

5. Unilever's growth warning

Consumer giant Unilever (LON:ULVR), the owner of Ben&Jerry’s ice cream and Dove soap, said it will miss its sales growth target for this year, due to the economic slowdown in India, one of its largest markets, and to the failure of sales to rebound as hoped in North America.

The Anglo-Dutch company said it would also miss its medium-term target of 3%-5% underlying sales growth in the first half of next year, before returning to target in the second half. The news, which reflect India’s sharpest economic slowdown in six years, raises the pressure on CEO Alan Jope, who was expected to close the valuation gap with arch-rival Nestle (SIX:NESN) when he took over.

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