InvestMacro

By JustMarkets

The US indices returned to growth on Tuesday, helped by a series of positive quarterly results from retailers. As the stock market closed, the Dow Jones Index (US30) increased by 1.18%, and the S&P 500 Index (US500) added 1.36%. The NASDAQ Technology Index (US100) gained 1.36% yesterday.

To summarize the comments from Fed officials over the past two weeks, the Central Bank is hinting at a slowdown in the pace of rate hikes at its December meeting, but the peak of rate hikes will likely be higher than previously expected. The prospect of a longer rate hike has investors worried that the Fed will not avoid a soft landing and that the economy will face a recession.

According to Statistics Canada, retail sales fell by 0.5% in September. Retail sales fell by 1% in the third quarter, the first quarterly decline since 2020. Lower-income Canadians will be hit the hardest as debt-service costs rise and purchasing power declines. According to analysts, the pain of the coming recession will not be shared equally between Canadian businesses and households. The manufacturing sector is likely to be among the first to suffer.

The OECD’s Global Economic Outlook report was also released Tuesday. According to the report, the global economy will slow down in the coming year due to the energy market shock caused by the Russian invasion of Ukraine and on the back of excessive inflation, low consumer confidence, and global risks. Nevertheless, the OECD believes the world will avoid a recession and predicts global economic growth of 3.1% in 2022, 2.2% in 2023, and 2.7% in 2024.

Stock markets in Europe were mostly up Tuesday. Germany’s DAX (DE30) gained 0.29%, France’s CAC 40 (FR40) added 0.35%, Spain’s IBEX 35 (ES35) increased by 1.67%, and the British FTSE 100 (UK100) closed up by 1.03% yesterday.

The European Union softened its latest sanctions proposal on price caps on oil exports from Russia, postponing its full implementation. According to the document, the bloc proposed adding a 45-day transition period to the imposition of the cap. Allies had previously discussed setting an upper limit between $40 and $60 a barrel – a range from prewar production costs in Russia – but analysts said the price range would probably be a bit higher. The EU is also proposing a 90-day transition period in case of any future changes in the price cap level. Most G-7 countries and the EU plan to stop importing Russian oil this year. Petroleum product regulations, including the oil price cap, will take effect in February.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.61% on Tuesday, Hong Kong’s Hang Seng (HK50) decreased by 1.31%, while Australia’s S&P/ASX 200 (AU200) ended the day up by 0.59%.

The Central Bank of New Zealand raised interest rates by a record 75 basis points and hinted at the further tightening of policy. The RBNZ forecasts show that OCR will peak at 5.5% in the third quarter of 2023, up from the previous peak of 4.1%. The bank forecasts that the economy will contract for four consecutive quarters starting in the second quarter of next year, with inflation starting to decline in the first quarter of 2023.

Concerns are growing in Japan that supply and demand for electricity will be strained this winter. The Japanese government is asking households and companies across the country to start saving electricity from December 1 through March 31. Although no quantitative figures have been set, this is the first time in seven years that people are being asked to save electricity during winter.

S&P 500 (F) (US500) 4,003.58 +53.64 (+1.36%)

Dow Jones (US30) 34,098.10 +397.82 (+1.18%)

DAX (DE40) 14,422.35 +42.42 (+0.29%)

FTSE 100 (UK100) 7,452.84 +75.99  (+1.03%)

USD Index 107.17 0.67 (-0.62%)

• – Australia Manufacturing PMI (m/m) at 00:00 (GMT+3);
• – Australia Services PMI (m/m) at 00:00 (GMT+3);
• – New Zealand RBNZ Interest Rate Decision at 03:00 (GMT+3);
• – New Zealand RBNZ Monetary Policy Statement at 03:00 (GMT+3);
• – New Zealand RBNZ Press Conference at 04:00 (GMT+3);
• – Singapore Consumer Price Index (m/m) at 07:00 (GMT+3);
• – Eurozone France Manufacturing PMI (m/m) at 10:15 (GMT+3);
• – Eurozone France Services PMI (m/m) at 10:15 (GMT+3);
• – Eurozone German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – Eurozone German Services PMI (m/m) at 10:30 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – US Durable Goods Orders (m/m) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 19:00 (GMT+3);
• – US FOMC Meeting Minutes at 21:00 (GMT+3).

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.

By JustMarkets

On Monday, US indices closed slightly lower on weakness in energy and consumer stocks amid reports that China has reverted to disruptive restrictions related to the coronavirus. As the stock market closed, the Dow Jones Index (US30) decreased by 0.13%, and the S&P 500 Index (US500) lost 0.13%. The NASDAQ Technology Index (US100) was down by 1.09% yesterday.

Over the weekend, Atlanta Fed President Raphael Bostic supported further rate hikes, although he said he would consider slowing the rate hike from 75 basis points to 50. San Francisco Federal Reserve President Mary Daly said Monday that the real impact of the US central bank’s interest rate hike is probably greater than its short-term target rate suggests. Compared to the Fed’s current short-term target rate, which is in the 3.75% to 4.00% range, financial markets are acting as if the rate is around 6%, Daly said. About 85% of analysts expect the Fed to raise by 50 basis points in December.

Stock markets in Europe were mostly down Monday. German DAX (DE30) decreased by 0.36%, French CAC 40 (FR40) was 0.15% lower, Spanish IBEX 35 (ES35) gained 0.75%, and British FTSE 100 (UK100) closed 0.12% lower.

According to the Federal Statistics Office (Destatis), the producer price index, which measures inflation between factories, slowed. Compared to September 2022, producer prices decreased by 4.2%. This is a good sign, as slowing producer inflation will eventually lead to slower consumer inflation.

UK Prime Minister Rishi Sunak said yesterday that the UK would no longer maintain any relationship with Europe that is based on compliance with EU laws. Britain’s withdrawal from the EU has caused serious economic damage to the region’s economy, so now the new prime minister has to face the consequences of Brexit.

According to Nomura Holdings Inc. Czech Republic, Romania and Hungary will face the risk of exchange rate crises over the next year as fiscal and external problems escalate. The warning is based on an analysis of eight indicators, including import coverage by foreign-exchange reserves, real short-term interest rates, and fiscal and current-account measures.

Crude oil markets rose sharply late in the trading session yesterday after Saudi Arabia, OPEC’s leader, said reports suggesting the cartel planned to increase supply in December were false.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) gained 0.16% on Monday, Hong Kong’s Hang Seng (HK50) decreased by 1.87%, and Australia’s S&P/ASX 200 (AU200) ended the day down by 0.17%.

New Zealand’s Central Bank is preparing to raise interest rates by 75 basis points, accelerating monetary tightening to bring inflation under control. According to analysts, tomorrow, the Reserve Bank will raise the official interest rate to 4.25% from 3.5%. This will be the biggest increase since the RBNZ introduced the OCR in 1999. Stronger-than-expected inflation and a near-record-low unemployment rate are forcing the RBNZ to accelerate policy tightening.

Most Asian central banks have also begun raising rates this year to keep up with the US Federal Reserve and are signaling further rate hikes to counter rising inflation.

A record rise in daily infections in China has led to the reintroduction of curbs in major cities, including Beijing and Shanghai. Markets fear tighter curbs could again stifle the country’s economic growth and cause new global supply chain problems.

S&P 500 (F) (US500) 3,949.99 −15.35 (−0.39%)

Dow Jones (US30) 33,700.67 −45.02 (−0.13%)

DAX (DE40) 14,379.93 −51.93 (−0.36%)

FTSE 100 (UK100) 7,376.85 −8.67 (−0.12%)

USD Index 107.77 +0.84 (+0.79%)

• – Australia RBA Governor Lowe Speaks at 09:00 (GMT+3);
• – Canada Retail Sales (m/m) at 15:30 (GMT+3);
• – FOMC Member Mester Speaks (m/m) at 18:00 (GMT+3);
• – FOMC Member George Speaks (m/m) at 21:15 (GMT+3);
• – FOMC Member Bullard Speaks (m/m) at 21:45 (GMT+3).

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.

By JustMarkets

The Federal Reserve’s hawkish signals have heightened fears of a potential US recession. Central Bank officials say they will not keep raising rates until inflation approaches its annual target range. This is a deterrent to further gains in stock indices. At the close of the stock market on Friday, the Dow Jones Index (US30) increased by 0.59% (+0.25% for the week) and the S&P 500 Index (US500) added 0.48% (-0.32% for the week). Technology Index NASDAQ (US100) gained 0.01% (-0.78% for the week).

The Fed is set to release the minutes of its November meeting on Wednesday, and investors eagerly await any indication that policymakers will consider slowing the tightening process.

Equity markets in Europe mostly rallied last week. German DAX (DE30) gained 1.16% (+0.95% for the week), French CAC 40 (FR40) added 1.04% (+0.33% for the week), Spanish IBEX 35 (ES35) increased by 1.08% (+0.04% for the week), British FTSE 100 (UK100) closed on Friday up by 0.53% (+0.92% for the week).

ECB officials seem to be divided over their future plans, with some advocating a sustained aggressive rate hike stance, while others are considering quantitative tightening (QT) earlier than expected to avoid such a hawkish interest rate hike. ECB President Christine Lagarde seems to support raising interest rates as the best tool for containing inflation.

Italy’s new right-wing government plans to announce Monday new spending of about 30 billion euros in next year’s budget, mostly focused on containing the impact of high energy prices. In an effort to help families cope with incredible inflation, which has reached an annualized rate of 12.6%, according to an EU-agreed index, the cabinet is considering eliminating a sales tax on necessities.

Oil prices fell on Monday, extending last week’s losses, as worries over rising COVID-19 infections in China and a potential global recession worsened demand prospects. On the other hand, if European politicians decide this week to put a ceiling on Russian oil prices, it could lead to supply cuts in the coming months, especially if inventories deplete faster. Therefore, the prospect of higher oil prices remains high. OPEC countries will meet on December 4 to decide on production, and any further supply cuts are likely to push oil prices higher.

The outlook for gold remains upward, despite some uncertainty. On the one hand, gold is rising on inflation expectations. On the other hand, gold does not protect against inflation and suffers greatly from rising interest rates. But analysts believe that given the fact that the market is now close to a maximum in interest rates, and in 2023 is expected to pause and then lower rates (according to the futures curve for the federal funds), such an asset as gold should take a weighty share in portfolios of active investors.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) declined by 1.31% over the week, Hong Kong’s Hang Seng (HK50) ended down by 0.04%, and Australia’s S&P/ASX 200 (AU200) decreased by 0.09%.

The People’s Bank of China (PBOC) on Monday left key lending rates unchanged for the third straight month as the central bank tries to strike a balance between boosting economic growth and curbing further yuan depreciation. The rise in COVID-19 cases in China has led to new lockdown measures in some of the country’s biggest cities, adding to fears of a slowdown in demand for crude oil from the world’s biggest oil importer. The country is currently battling its worst COVID outbreak since April, when several cities were blockaded.

In the commodities market, futures on natural gas (+8.37%), sugar (+2.09%), and corn (+1.71%) showed the biggest gains by the end of the week. Futures on coffee (-13.66%), WTI oil (-9.78%), Brent oil (-8.59%), gasoline (-7.32%), copper (-7.04%), platinum (-4.98%), palladium (-4.49%), silver (-3.19%), cotton (-3.14%) and cocoa (-2.22%) showed the biggest drop.

S&P 500 (F) (US500) 3,965.34 +18.78 (+0.48%)

Dow Jones (US30) 33,745.69 +199.37 (+0.59%)

DAX (DE40) 14,431.86 +165.48 (+1.16%)

FTSE 100 (UK100) 7,385.52 +38.98 (+0.53%)

USD Index 106.97 +0.28 (+0.26%)

• – German Producer Price Index (m/m) at 09:00 (GMT+3).

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.

By George Prior

The deadlock at COP27 underscores why political leaders cannot be trusted to tackle the climate crisis and why private money must be urgently mobilized.

This is the stark warning from Nigel Green, the CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations.

It comes as the EU offered a plan late on Thursday to find a solution to deadlocked climate talks at COP27 in Egypt, suggesting a loss and damage finance facility for the most vulnerable countries in return for a vow to phase down oil, gas and coal.

The deVere CEO says: “The official draft of the decision text put forward by the Egyptian presidency on Friday morning goes nowhere near hard enough on the phasing out of fossil fuels – a major condition for the European Union.

“This is unlikely to break the deadlock.

“As such, talks are now likely to go on into the weekend.”

He continues: “This deadlock shows how politicians, especially those in developed countries, are often all talk, less action.

“But what is required is major action – and now – if we are to reverse the worst impact of human-created climate change.

“To date, there have been decades of inaction from political leaders. Governments around the world are either unwilling or unable to funnel the resources necessary to try and tackle the problem head-on.

“Therefore, it is critical that the private money is mobilized and harnessed to usher in an era of real action before it’s too late.”

Nigel Green has long been issuing a ‘call to arms’ in this regard.  Ahead of COP27, he noted: “Trillions of dollars are needed. This is why it is now critical that private money is unlocked and mobilized in the battle to mitigate the worst effects of human-created climate change.

“For this to happen, all sectors within the financial industry need to step-up, including financial advisories, insurance firms, banks, wealth and asset managers, investment companies, fintech groups, banks and auditors.

“If we fail on this, the level of finance will not be available, nor at the pace necessary, to halt the catastrophic effects of global warming.”

The deVere Group CEO’s calls come after he has publicly criticized some within the financial advisory industry who fail to urge clients to invest in Environmental, Social and Governance (ESG) orientated investments.

“I would say to those in our industry who are looking to weaponize or politicize ESG investing by branding it as ‘woke virtue-signalling’, amongst other things, that they are placing themselves and their companies on the wrong side of history.”

He went on to add that clients’ investment strategies would also benefit.

“Funds investing in entities with robust ESG credentials have outperformed their benchmarks over recent years. From a risk management point of view, including these companies in your portfolio is, clearly, a sensible decision to take.”

Last year ahead of COP26, deVere Group became one of 18 founding signatories of the UN-backed Net Zero initiative, the international alliance of powerhouse global finance companies that will help accelerate the transition to a net zero financial system.

The deVere CEO concludes: “The leaders at COP27 need to urgently step up or the summit becomes little more than a ‘talking shop.’ I hope they do.

“But there is no doubt that huge amounts of private money will also be needed.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

By JustMarkets

Weekly US jobless claims fell last week, indicating that the US labor market remains robust. That strengthens the outlook for more hawkish Fed policy and raises fears of a recession caused by higher interest rates. As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.02%, and the S&P 500 Index (US500) lost 0.31%. The NASDAQ Technology Index (US100) was down by 0.35%.

Fed spokesman Kashkari said yesterday that the central bank couldn’t be too convinced by one month’s data, so the Fed needs to keep raising rates at the same pace until inflation stops rising. But the policymakers added that the economic data provide some evidence that inflation is at a plateau. Another Bullard Fed spokesman pointed out that the rate hikes so far have had “only a limited impact” on inflation. Using the so-called Taylor rule for monetary policy, Bullard suggested that the proper zone for the federal funds rate should be in the 5-7% range, above current market prices and unofficial Fed forecasts.

Equity markets in Europe were mostly down yesterday. German DAX (DE30) gained 0.23%, French CAC 40 (FR40) decreased by 0.47%, Spanish IBEX 35 (ES35) lost 0.75%, and British FTSE 100 (UK100) was down by 0.06% on Thursday.

The inflation rate in the Eurozone fell from 10.7% to 10.6% on an annualized basis. Core inflation (excluding food and fuel prices) remained at 5% y/y. The data points to a possible peak in inflation. This increases the probability that the ECB will raise interest rates by 0.5% at its next meeting rather than by 0.75%, as previously discussed.

The UK government on Thursday unveiled an extensive fiscal plan aimed at closing the hole in finances and restoring confidence in the British economy. Finance Minister Jeremy Hunt, in a statement, outlined spending cuts and £55 billion worth of tax increases. The energy industry will face an increased tax on contingencies from 25% to 35%. Meanwhile, support for households to pay their energy bills will be reduced, with bills rising from £2,500 a year to £3,000 a year from April 2023. The UK GDP is projected to recover to pre-pandemic levels in Q4 2024.

According to Fiscal Watchdog, Brexit has had a significant negative impact on UK trade, reducing both the total volume of trade and the number of trade relationships between British and European firms. The Fiscal Watchdog said this in a forecast prepared for the government.

The European Parliament has agreed to a resolution recognizing Russia as a state sponsor of terrorism, a member of the European Parliament said. The resolution is expected to be discussed and voted on by the European Parliament during a session on November 21-24.

Asian markets were trading lower yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.35%, Hong Kong’s Hang Seng (HK50) ended the day down by 1.15%, while Australia’s S&P/ASX 200 (AU200) ended the day up by 0.19%.

Goldman Sachs forecasts an acceleration of growth in China in the second half of 2023. China’s actions to mitigate two of the biggest risks facing the economy — coronavirus-related restrictions and a downturn in the real estate market — are fueling optimism for growth recovery next year, prompting economists to raise key forecasts.

The Reserve Bank of New Zealand will raise its rate by 50 bps next week and is signaling a peak rate of about 5.0%. The ongoing housing market downturn and deteriorating external conditions are arguments against a larger move of 75 bps.

Core consumer inflation in Japan accelerated to 3.6%, a 40-year-high. The weak yen has pushed up the cost of imported goods. But despite mounting price pressures that are causing growing concern among households, the Bank of Japan will not join the global trend of tightening monetary policy by raising interest rates. Bank of Japan Governor Haruhiko Kuroda reiterated on Thursday his pledge to maintain monetary stimulus to support the fragile economy.

S&P 500 (F) (US500) 3,946.56 −12.23 (−0.31%)

Dow Jones (US30) 33,553.83 −39.09 (−0.022%)

DAX (DE40) 14,266.38 +32.35 (+0.23%)

FTSE 100 (UK100) 7,346.54 −4.65 (−0.063%)

USD Index 106.64 +0.35 (+0.33%)

• – Japan National Consumer Price Index (m/m) at 01:30 (GMT+2);
• – UK Retail Sales (m/m) at 09:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 10:30 (GMT+2);
• – US Existing Home Sales (m/m) at 17:00 (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.

By George Prior 

The UK Autumn Statement restored some much-needed market credibility but the finance minister’s implied support for interest rate hikes spells more pain for people across the UK, affirms the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The observations from deVere Group’s Nigel Green follow Chancellor Jeremy Hunt delivering his Budget to parliament in which he unveiled a raft of stealth tax hikes and spending cuts.

The deVere CEO says: “The markets have remained largely unmoved by the Chancellor’s Autumn Statement.

“Hunt has managed to make markets boring again – which is a win for the government.

“The idea was to restore stability following Liz Truss’s disastrous mini-budget in September when the pound hit historic lows against the dollar, gilt yields jumped, and stock markets fell due to reckless economic policies.

“The lack of major volatility of the pound and the bond market, which sets the rate at which the government can borrow money, suggests the Hunt statement has worked in bringing back some much-needed market credibility.”

Whilst Rishi Sunak’s government might have soothed the markets somewhat, there are, says Nigel Green, some questions about the Chancellor’s handle on the UK’s soaring inflation crisis, as it hits a 41-year high of 11.1%

“Hunt gave his full support to the Bank of England to tackle the red-hot inflation, which implies his support for more, and probably aggressive, interest rate hikes.

“This at a time when the UK is nose-diving into a recession.

“Another hike can be expected to make the downturn in Britain’s consumer-driven economy worse and last for longer.

“It would mean higher borrowing costs for property owners on variable rate mortgages. Lenders will also increase the rates they charge on personal and business loans at a time when households and firms are facing a shocking cost of living crisis.

“The Bank of England’s anticipated hike would be harmful to the economy and pile on the pain for people across the country.”

The deVere CEO adds: “Hunt began his Budget saying the inflation problem is largely fuelled by external issues, such as rocketing energy prices, rather than by domestic ones.

“Which begs the question: Why is he backing the Bank of England to continue to increase the UK’s interest rates again when they cannot tackle inflation caused by global issues?”

He concludes: “Hunt’s fiscal discipline will please the markets, but households and businesses across the UK will be braced for yet more financial pain in the months to come.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

By JustMarkets

Yesterday, the US Department of Commerce announced that Retail Sales in October rose by 1.3% (1.0% expected). Stronger than expected US Retail Sales overshadowed the inflation outlook and hope that the Federal Reserve will scale back its aggressive rate hike. As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.12%, and the S&P 500 Index (US500) lost 0.83%. The NASDAQ Technology Index (US100) fell by 1.54%.

San Francisco Fed President Mary Daly told CNBC that it is prudent for the Fed to raise the interest rate to the 4.75-5.25% range (the current level is 4.00%) by early next year and that pausing rate hikes is not part of the discussion. Money markets currently estimate a 93% chance that the Fed will decrease a step rate hike to 0.5% at its December 14 meeting and only a 7% chance of a 75 basis point hike. Goldman Sachs added another 25 basis point Fed hike to its forecast for 2023 and raised its forecast for the peak federal funds rate to 5.0-5.25%. According to GS analysts, policymakers will have to counter any premature easing because of high and persistent inflation.

Equity markets in Europe traded lower yesterday. Germany’s DAX (DE30) decreased by 1.00%, France’s CAC 40 (FR40) was down by 0.52%, Spain’s IBEX 35 (ES35) lost 1.06%, Britain’s FTSE 100 (UK100) closed down by 0.25% on Wednesday.

The European Central Bank (ECB) is likely to raise interest rates again in December to combat rising inflation, said Governing Council spokesman François Villeroy de Galhau. But two key ECB policymakers said Wednesday that while the European Central Bank should continue to raise interest rates, there are growing reasons for increased caution in tightening policy after a series of aggressive moves. Analysts forecast a 0.5% rate hike at the ECB’s next meeting.

Today, the inflation data will be published in Europe. Experts believe that the base Consumer Prices (excluding food and fuel prices) in Europe will reach a new record.

The UK Treasury Secretary Jeremy Hunt will unveil the government’s new budget on Thursday, which is likely to cut government spending and raise taxes. According to analysts, the UK is already in recession, with record inflation at 11%. A return to austerity would hurt millions of households and exacerbate the expected recession. But it would help slow borrowing costs, lower inflation, and restore investor confidence.

The European Commission called on the EU Council to include Bulgaria, Romania, and Croatia in the Schengen Agreement, as the countries effectively met all the conditions for joining the visa-free area. The EC believes that expanding the list of Schengen countries will make Europe safer through enhanced protection of common external borders and effective law enforcement cooperation.

Demand for gold as a safe haven has recently declined as fears of an escalating war in Ukraine subsided, while copper prices continued to fall on fears of a COVID-19 outbreak in China. Geopolitical fears in Europe eased slightly after Poland and NATO said Wednesday that Tuesday’s explosion, which killed two people in Poland, was probably caused by part of a Ukrainian air defense system missile and not a deliberate Russian strike. But Ukraine is asking for its representatives to be allowed into the investigation since the fragments of the rocket do not leave a hole with a depth of 5 meters.

Oil prices declined for the second day in a row as concerns over geopolitical tensions eased and rising COVID-19 cases in China increased fears over demand from the world’s largest oil importer. Crude inventories in the United States, the world’s largest oil consumer, fell by 5.4 million barrels over the week.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 0.14%, Hong Kong’s Hang Seng (HK50) decreased by 0.47%, and Australia’s S&P/ASX 200 (AU200) ended the day down by 0.27%.

Japan’s imports more than halved year-on-year in October, eclipsing the growth in exports and widening the trade deficit. Thus, the trade deficit exacerbates the problems faced by households struggling to make ends meet as import prices rise. Businesses that depend on imports are also facing problems, so they are shifting risk and rising prices to customers.

Minutes from the November policy meeting of Australia’s central bank showed that the RBA is ready to either pause or return to a larger rate hike “if the economy demands it.” Australia’s unemployment rate fell from 3.5% to 3.4%, indicating that the RBA has room to maneuver as the labor market remains resilient.

S&P 500 (F) (US500) 3,958.79 −32.94 (−0.83%)

Dow Jones (US30) 33,553.83 −39.09 (−0.12%)

DAX (DE40) 14,234.03 −144.48 (−1.00%)

FTSE 100 (UK100) 7,351.19 −18.25 (−0.25%)

USD Index 106.31 −0.10 (−0.09%)

• – Australia Unemployment Rate (m/m) at 02:30 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – US FOMC Member Bullard Speaks at 15:00 (GMT+2);
• – US Building Permits (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US FOMC Member Bowman Speaks at 16:15 (GMT+2);
• – US FOMC Member Mester Speaks at 16:40 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (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.

By JustMarkets

Major US indices fell on Monday as hawkish comments from US Federal Reserve officials tempered investors’ hopes that the central bank would ease its aggressive monetary policy. As the stock market closed yesterday, the Dow Jones Index (US30) decreased by 0.63%, and the S&P 500 Index (US500) fell by 0.89%. The NASDAQ Technology Index (US100) lost 1.12% on Monday.

The US Fed spokeswoman Brainard echoed recent statements from other bank officials that it may be appropriate to move to a slower rate of increase. The market expects the Fed to continue its hawkish rhetoric on rates through March 2023. Traders now expect the Fed to raise interest rates by 0.5% in December and expect the final rate to be in the 4.75%-5.0% range. Then according to bank analysts, rates will be at this level until the end of 2023, after which rates will begin to decline in early 2024. Bank analysts believe that it is during the “pause” period that the stock market will show strong growth.

The midterm elections in the US indicate that the Democrats retain control of the Senate. They now have 50 seats against 49 for Republicans. Democratic leaders in Congress on Sunday promised to tackle the national debt ceiling in the coming weeks, saying their party’s election victory gives them leverage. The US House Speaker Nancy Pelosi and US Senate Majority Leader Chuck Schumer said they would act as long as Democrats control both houses.

Along with raising rates, the Fed continues to reduce the number of bonds on its balance sheet to $95 billion monthly. Since that process (quantitative tightening) began in June, the Fed’s balance sheet has shrunk by more than $235 billion but remains at $8.73 trillion.

Morgan Stanley’s experts forecast the SPY price to fall to 3000-3300 in the coming weeks, and they see the end of the year around 3900, which is where the price is now.

Goldman Sachs predicts a significant decline in inflation in the US next year. Analysts at the bank expect the core PCE to fall to 2.9% by December 2023 from the current 5.1%.

Equity markets in Europe traded higher yesterday. Germany’s DAX (DE30) gained 0.62%, France’s CAC 40 (FR40) gained 0.22%, Spain’s IBEX 35 (ES35) jumped by 0.52%, and the British FTSE 100 (UK100) closed up to 0.92% on Monday.

ECB member De Guindos made a speech yesterday and left some important comments:

• Monetary policy should focus on reducing demand support;
• Inflation expectations are unchanged at the moment;
• The ECB will continue to raise interest rates;
• Fiscal support measures should be targeted and temporary.

The Eurozone saw surprisingly strong production in the third quarter as easing supply problems contributed to growth. Industrial production rose by 0.9% in September, leading to a quarterly increase of 0.5% in Q3. This was a surprise as businesses reported lower new orders due to lower demand. Thus, analysts still expect a dip in the winter months, as the catch-up effect of production growth is unlikely to last.

The European Commission permitted Berlin to nationalize the former unit of Russian gas monopoly Gazprom, supporting the efforts of Europe’s largest economy to restore order to the energy market.

According to experts, Britain will have dark days at least until mid-2024 as British Chancellor Jeremy Hunt warns that tax hikes will affect everyone and cuts in public spending are inevitable.

Due to China’s worries about COVID and OPEC’s reduced demand forecast, oil prices are down. While investors welcomed China’s announcement last week that it would reduce the impact of a strict zero COVID policy to stimulate economic activity and energy demand, analysts said blockages and rising incidence of the disease remain a key downside risk.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) decreased by 1.06%, Hong Kong’s Hang Seng (HK50) ended the day up by 1.70%, and Australia’s S&P/AS 200 (AU200) ended the day down by 0.16%.

The Chinese authorities are doing their best to put an end to the crisis in the country’s huge real estate sector, which has hit the economy hard in the past year. Key measures include allowing banks to make payday loans to developers, supporting real estate sales by reducing down payments, lowering mortgage rates, and encouraging other financing channels such as bond issues and ensuring pre-sold homes are delivered to buyers. In essence, policymakers have told banks to do whatever they can to support the real estate sector. Shares of Chinese developers rose substantially on Monday, boosting the market as a whole.

Japan’s GDP unexpectedly contracted in the third quarter due to soaring inflation and slowing global economic growth. This was the first quarterly decline in over a year. Official data showed that the gross domestic product fell by 1.2% year-over-year.

S&P 500 (F) (US500) 3,957.25 −35.68 (−0.89%)

Dow Jones (US30) 33,536.70 −211.16 (−0.63%)

DAX (DE40) 14,313.30 +88.44 (+0.62%)

FTSE 100 (UK100) 7,385.17 +67.13 (+0.92%)

USD Index 106.86 +0.57 (+1.53%)

• – Japan GDP (q/q) at 01:50 (GMT+2);
• – Australia RBA Monetary Policy Meeting Minutes at 02:30 (GMT+2);
• – China Industrial Production (m/m) at 04:00 (GMT+2);
• – China Retail Sales (m/m) at 04:00 (GMT+2);
• – China Unemployment Rate (m/m) at 04:00 (GMT+2);
• – Japan Industrial Production (m/m) at 06:30 (GMT+2);
• – UK Average Earnings Index (m/m) at 09:00 (GMT+2);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+2);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+2);
• – Eurozone French Consumer Price Index (m/m) at 09:45 (GMT+2);
• – Eurozone Spanish Consumer Price Index (m/m) at 10:00 (GMT+2);
• – Eurozone German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – US Empire State Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US Producer Price Index (m/m) at 15:30 (GMT+2);
• – G20 Meetings (Day 1).

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.

By JustMarkets

At the closing of the stock market on Friday, Dow Jones (US30) gained 0.09% (+3.99% for the week), and S&P 500 (US500) added 0.92% (+5.61% for the week). Technology Index NASDAQ (US100) increased by 1.88% on Friday (+7.67% for the week). However, despite the indices’ growth, analysts keep decreasing the forecasts of the US companies’ financial results and now expect negative growth of the “blue chips” total earnings in the 4th quarter. So far, 91% of the S&P 500 companies have already reported. 69% reported higher-than-expected actual earnings per share, below the average of 77%.

The US Federal Reserve may consider slowing the rate hikes at its next meeting. Still, Federal Reserve Chairman Christopher Waller said Sunday that it should not be seen as “easing” its commitment to lower inflation. According to analysts, markets should now pay attention to the end point of rate hikes rather than the pace of each move.

The midterm elections in the US indicate that the Democrats retain control of the Senate. They now have 50 seats against 49 for Republicans. Democratic leaders in Congress on Sunday promised to tackle the national debt ceiling in the coming weeks, saying their party’s election victory gives them leverage. The US House Speaker Nancy Pelosi and US Senate Majority Leader Chuck Schumer said they would act as long as Democrats control both houses.

Stock markets in Europe traded mixed last week. German DAX (DE30) gained 0.56% (+6.17% for the week), French CAC 40 (FR40) added 0.58% (+3.37% for the week), Spanish IBEX 35 (ES35) decreased by 0.43% (+2.34% for the week), British FTSE 100 (UK100) closed on Friday down by 0.78% (-0.23% for the week).

Germany’s inflation rate rose from 10% to 10.4% year-over-year, the highest since Germany’s reunification. Huge increases in energy prices continue to be the main cause of high inflation. In addition to rising prices for all types of energy due to the war in Ukraine and the energy crisis in Europe, supply disruptions and significant price increases in the preceding stages of the economic process are also affecting the inflation rate.

UK GDP fell sharply by 0.6% in the third quarter (with expectations of -0.1%). Analysts predict that this is the beginning of a recession for the UK and expect GDP to fall 2% by summer. However, much depends on how the government’s energy support develops during this period. As winter approaches, analysts expect more problems in manufacturing, construction, and industrial issues. But much will depend on Thursday’s budget announcement this week.

The EU Commission predicts that Eurozone quarterly GDP will contract in the fourth quarter of 2022 and the first quarter of 2023. As for consumer prices, the European Commission believes that inflation in the Eurozone will begin to decline next year, reaching an annualized rate of 7.0%.

Oil prices rose nearly 1% on Monday, continuing Friday’s gains as China eased some of its strict COVID-19 restrictions, raising hopes for a rebound in economic activity and demand from the world’s largest oil importer.

Asian markets mostly rose last week. Japan’s Nikkei 225 (JP225) gained 3.25% over the week, Hong Kong’s Hang Seng (HK50) jumped by 8.07%, and Australia’s S&P/ASX 200 (AU200) was up by 3.85%.

Annual Core Consumer Inflation surpassed the Bank of Japan’s target of 2% for the sixth straight month as the weak yen, partly driven by the central bank’s low-interest rate policy, pushed up import prices and household living costs. Bank of Japan Governor Haruhiko Kuroda has repeatedly said that the central bank should refrain from adjusting the YCC until its 2% inflation target is sustainably achieved and accompanied by wage increases. According to a key government commission spokesman, the Bank of Japan should steer a course toward policy normalization over the long term.

In the commodities market, futures on palladium (+11.28%), cocoa (+9.38%), platinum (+8.66%), copper (+6.77%), gold (+5.82%), silver (+4.86%), and sugar (+4.7%) showed the biggest gains by the end of the week. Futures on natural gas (-7.78%), orange juice (-5.42%), WTI oil (-4.05%), wheat (-4.01%), coffee (-3.98%), gasoline (-3.86%), corn (-3.45%), and Brent oil (-2.85%) showed the biggest drop.

S&P 500 (F) (US500) 3,992.93 +36.56 (+0.92%)

Dow Jones (US30) 33,747.86 +32.49 (+0.096%)

DAX (DE40) 14,224.86 +78.77 (+0.56%)

FTSE 100 (UK100) 7,318.04 −57.30 (−0.78%)

USD Index 106.42 −1.79 (−1.65%)

• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – Switzerland SNB Chairman Thomas Jordan speaks at 18:30 (GMT+2);
• – US FOMC Member Brainard Speaks at 18:30 (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.

By JustMarkets

The US stock indices skyrocketed yesterday thanks to a long-awaited US inflation slowdown. The US Consumer Price Index fell from 8.2% to 7.9% year-over-year (8.0% expected). Core inflation, which excludes food and energy, also declined from 6.6% to 6.3% (6.5% expected). The decline in inflation indicates that the peak of inflation is likely to be over, which means the US Fed can reduce the pace of interest rate hikes so as not to put additional pressure on the economy. The probability of a 0.5% rate hike in December rose to 81% (vs. 56% the day before). As the stock market closed, the Dow Jones Index (US30) increased by 3.70%, and the S&P 500 Index (US500) jumped by 5.54%. The Technology Index NASDAQ (US100) was up yesterday by a record increase of 7.35% in 1 day. Near the end of this difficult year, investors are starting to see the light at the end of the tunnel and a chance for a moderate pre-New Year’s rally.

Given the prospect of a less hawkish Fed decision, Treasury yields have fallen sharply, and 2-year Treasury yields, sensitive to Fed policy, have fallen to a two-week low, helping big tech companies grow.

“The easing of core inflation in the October report is welcome news for the Fed,” Morgan Stanley said in a note. But the bank warned that optimism about slowing inflation could be dispelled if incoming data show that labor markets remain tight.

Equity markets in Europe also rose yesterday. German DAX (DE30) gained 3.51%, French CAC 40 (FR40) increased by 1.96%, Spanish IBEX 35 (ES35) added 1.15%, and British FTSE 100 (UK100) closed yesterday with a 1.08% gain.

Joachim Nagel of the European Central Bank (ECB) Governing Council said on Thursday that the ECB still needs to act decisively to fight inflation, which requires additional interest rate increases. The politician also noted that monetary policy has a time lag, so it takes time for rates to work to their full potential. Today, analysts’ attention is focused on German inflation data.

There was a broad rally in commodities markets Thursday as the dollar index fell sharply, posting its biggest daily drop in 11 years. But the oil market reacted more or less calmly. The relatively modest rise in oil was triggered by continuing news of a rise in the incidence of Covid in China. New cases of the coronavirus have broken out in the export capital of China’s Guangdong province, raising fears that the severe restrictions imposed in Shanghai earlier this year may be in the area. For the oil market, the damage from China’s lockdowns far outweighed the benefits of any Fed rate easing. But after news of the lifting of restrictions in Hong Kong, oil prices have been showing gains since the market opened.

The price of gold rose to its highest level in 3 months. Gold is inversely correlated to the dollar index and US government bond yields, so a sharp decline in the dollar index contributed to the rise in precious metal prices.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.98%, Hong Kong’s Hang Seng (HK50) ended down by 1.70%, while Australia’s S&P/ASX 200 (AU200) fell by 0.50%. But Asian stocks opened sharply higher on Friday as the Hong Kong government eased some restrictions related to COVID, encouraging optimism for a broader lifting of restrictions. Hong Kong’s Hang Seng (HK50) is already up more than 6% from the market opening. Analysts at Goldman Sachs predict that Chinese stocks could rise 20% when the country eventually waives COVID-19 and that it could do so by mid-2023.

S&P 500 (F) (US500) 3,956.37 +207.80 (+5.54%)

Dow Jones (US30) 33,715.37 +1,201.43 (+3.70%)

DAX (DE40) 14,146.09 +479.77 (+3.51%)

FTSE 100 (UK100) 7,375.34 +79.09 (+1.08%)

USD Index 107.93 -2.64 (-2.39%)

• – UK GDP (q/q) at 09:00 (GMT+2);
• – UK Industrial Production (m/m) at 09:00 (GMT+2);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+2);
• – Eurozone German Consumer Price Index (m/m) at 09:00 (GMT+2);
• – Eurozone Economic Forecasts (m/m) at 12:00 (GMT+2);
• – Switzerland SNB Chairman Jordan speaks at 14:45 (GMT+2);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (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.