Inflation continues to decline in the Eurozone. Investors are in no hurry to invest in Chinese stocks

November 1, 2023

At Tuesday’s stock market close, the Dow Jones Index (US30) increased by 0.38%, while the S&P 500 Index (US500) added 0.65%. The NASDAQ Technology Index (US100) closed positive 0.48% yesterday. Stocks closed moderately higher on Tuesday amid mostly better-than-expected corporate earnings results.

The US economic news released Tuesday was mixed for the dollar and stock indices. On the positive side, the third quarter labor cost index rose by 1.1%, stronger than expectations of an additional 1.0%. In addition, the S&P CoreLogic composite-20 home price index for August rose by 2.16% year-over-year, which was stronger than expectations of 1.75% and was the most significant increase in 7 months. On the bearish side, the Conference Board US Consumer Confidence Index for October fell by 1.7 to a 5-month low of 102.6. In addition, the October Chicago PMI unexpectedly declined by 0.1 to 44.0, weaker than expectations of a rise to 45.0.

In the Middle East, Iran’s foreign minister on Tuesday called for utilizing the “last political opportunities” to end the war between Israel and Hamas. It was also reported that Yemen fired a ballistic missile at Israel, which was successfully shot down.

Equity markets in Europe traded yesterday without a single dynamic. German DAX (DE40) rose by 0.64%, French CAC 40 (FR40) yesterday rose by 0.89%, Spanish IBEX 35 (ES35) fell by 0.02%, and British FTSE 100 (UK100) closed negative 0.08%.

October Eurozone CPI declined to 2.9% y/y from 4.3%, weaker than expectations of 3.1% y/y and the lowest increase in 2 years. Core CPI slipped to 4.2% y/y in October from 4.5% y/y in September, which matched expectations and was the lowest reading in 15 months. Eurozone GDP declined 0.1% q/q in Q3 but grew 0.1% y/y, weaker than expected. German retail sales for September unexpectedly fell by 0.8% m/m, weaker than expectations of 0.5% m/m. Stournaras of the ECB Governing Council said that he believes interest rates in the Eurozone have peaked. He would consider cutting interest rates if inflation falls consistently and steadily below the 3% threshold in mid-2024.

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Oil prices initially went up on Tuesday on fears that the conflict between Israel and Hamas could escalate on reports that Israel is shelling militant targets in Lebanon, which has the potential to widen the conflict. However, Tuesday’s global economic news was weaker than expected and negatively impacted energy demand and crude oil prices.

Asian markets traded without any unified dynamics. Japan’s Nikkei 225 (JP225) gained 0.53% yesterday, China’s FTSE China A50 (CHA50) declined by 0.07%, Hong Kong’s Hang Seng (HK50) fell by 1.69% on the day, while Australia’s ASX 200 (AU200) was positive 0.12% on Tuesday.

Recent Chinese manufacturing activity data indicates that Beijing’s stimulus measures have had a limited economic impact. Additional government spending will likely be required to lift the Chinese economy from a three-year slump. Due to this, investors are largely wary of investing in Chinese markets.

Japanese economic news released on Tuesday was mixed for the yen. On the bearish side, industrial production for September rose by 0.2% m/m, which was weaker than expectations of 2.5% m/m. Retail Sales for September unexpectedly declined by 0.1% m/m, which was weaker than expectations of 0.2% m/m. In contrast, Consumer Confidence for October unexpectedly rose by 0.5 to 35.7, stronger than expectations of a decline to 35.0.

S&P 500 (F)(US500) 4,193.80 +26.98 (+0.65%)

Dow Jones (US30) 33,052.87 +123.91 (+0.38%)

DAX (DE40) 14,810.34 +93.80 (+0.64%)

FTSE 100 (UK100) 7,321.72 −5.67 (−0.08%)

USD Index 106.74 +0.62 (+0.58%)

News feed for 2023.11.01:

– New Zealand RBNZ Gov Orr Speaks at 00:00 (GMT+2);
– Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
– Switzerland Manufacturing PMI (m/m) at 10:30 (GMT+2);
– UK Manufacturing PMI (m/m) at 11:30 (GMT+2);
– US ADP Nonfarm Employment Change (m/m) at 14:15 (GMT+2);
– Switzerland SNB Chairman Thomas Jordan speaks at 14:40 (GMT+2);
– Canada Manufacturing PMI (m/m) at 15:30 (GMT+2);
– US ISM Manufacturing PMI (m/m) at 16:00 (GMT+2);
– US JOLTs Job Openings (m/m) at 16:00 (GMT+2);
– US Crude Oil Reserves (w/w) at 16:30 (GMT+2);
– US FOMC Statement at 20:00 (GMT+2);
– US Fed Interest Rate Decision at 20:00 (GMT+2);
– US FOMC Press Conference at 20:30 (GMT+2).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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Inflation continues to decline in the Eurozone. Investors are in no hurry to invest in Chinese stocks