Oil prices were down by 10% in 2 weeks, and natural gas lost 19%. The PBoC cut interest rates

The Dow Jones (US30) Index was up 0.09% on Friday (+1.11% for the week). The S&P 500 Index (US500) was up 0.40% (for the week +0.60%). The NASDAQ Technology Index (US100) closed positive 0.63% (for the week +0.34%).

Atlanta Federal Reserve Bank President Raphael Bostic said he was in no hurry to cut interest rates to the so-called neutral level, emphasizing that policymakers intend to achieve the 2% inflation target. The Atlanta Fed chief reiterated that the central bank’s benchmark rate is still “somewhat above” the level at which it neither stimulates nor slows the economy, which he estimated at 3% to 3.5%. Bostic also said he expects inflation to fall to the Fed’s target level by the end of next year.

Netflix (NFLX) shares are up 11% after better-than-expected third-quarter earnings, revenue, and subscriber growth.

The world’s Central Bank governors and finance ministers will gather in Washington today for the annual meeting of the International Monetary Fund and the World Bank to discuss how countries can cope with low growth and high debt levels. Last week, the IMF warned that global public debt is expected to exceed $100 billion by the end of this year, driven by rising debt in the US and China. High debt levels could trigger a negative market reaction and limit budgetary efforts to respond to economic shocks.

Equity markets in Europe rose steadily on Friday. Germany’s DAX (DE40) rose by 0.38% (for the week +1.28%), France’s CAC 40 (FR40) closed 0.39% higher (for the week +0.39%), Spain’s IBEX 35 (ES35) gained 0.17% (for the week +1.78%), and the UK’s FTSE 100 (UK100) lost 0.32% (for the week +1.27%). European stocks closed solidly higher, helped by projections that the ECB will continue to cut key interest rates. Markets expect rates to be cut by 25 basis points at each meeting until mid-2025.

WTI crude oil prices fell by 2% to $69.2 a barrel, the biggest weekly decline since early September, falling more than 8%. The decline was driven by weakening demand estimates from OPEC and the IEA, slowing economic growth in China, and signs of easing geopolitical tensions in the Middle East. Both OPEC and the International Energy Agency (IEA) lowered their demand projections for 2024 and 2025. Output at China’s refineries declined for the sixth consecutive month, impacted by weak fuel demand and the rise of electric vehicles (EVs). Meanwhile, US crude oil production hit another record last week, although prices were supported by lower US crude inventories and better-than-expected US retail sales in September. In addition, investors are keeping a close eye on the possible development of the conflict between Israel and Iran, which could affect the global oil supply.

For the week, natural gas prices (XNG/USD) fell about 11% after falling 8% the week before. Traders are increasingly skeptical that extreme cold weather this winter will cause prices to spike. Gas production in the lower 48 states fell slightly in October, and production in 2024 could decline for the first time since 2020.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell by 1.65%, China’s FTSE China A50 (CHA50) lost 1.80%, Hong Kong’s Hang Seng (HK50) decreased by 2.00%, and Australia’s ASX 200 (AU200) was negative 0.87%.

Bank of Japan (BoJ) officials see no need to rush to raise interest rates this month, while they retain the option of raising rates at a later date if inflation remains in line with prognoses. Officials see only a small risk that prices will significantly exceed the Central Bank’s quarterly estimates set in July, reducing the need to act quickly. The Bank of Japan is expected to leave its benchmark rate unchanged at 0.25% at its policy meeting that ends October 31.

Traders reacted with restraint to the People’s Bank of China’s (PBoC) recent monetary easing, which sent rates to new record lows. The one-year LPR, which serves as a benchmark for most corporate and household loans, was cut by 25 bps, while the five-year LPR, often used as a benchmark for mortgages, was also cut by 25 bps to 3.6%. The decision followed PBOC head Pan Gongsheng’s announcement last week of a 20–25 bps LPR cut and his suggestion that the RRR for commercial banks could be further reduced in 4Q2.