InvestMacro

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.

By ForexTime 

First, let’s recap the volatile week that was for global financial markets!

Here’s the stunning price action that ensued after the lower-than-expected US inflation print that was released yesterday (Thursday, Nov 10th):

• DXY, the benchmark used to measure the US dollar’s performance against six major G10 currencies, saw its biggest single-day drop since December 2015!
• The S&P 500 posted its best one-day surge since the onset of the Covid-19 pandemic, while also registering its best CPI day advance since 2008!
• Gold is on course for its largest one-week gain since July 2020 (unless the precious metal can keep on climbing today to register a weekly gain of more than 5.06%)

And even before the dust has fully settled from yesterday’s major moves, it’s already time we look ahead to next week, given the forward-looking nature of the markets.

The British Pound is set to be in particular focus amidst these potential market-moving economic data releases and events:

Monday, November 14

• EUR: Eurozone September industrial production; speeches by ECB’s Fabio Panetta, Luis de Guindos
• USD: Speech by New York Fed President John Williams

Tuesday, November 15

• JPY: Japan Q3 GDP
• AUD: Reserve Bank of Australia November meeting minutes
• CNH: China October industrial production, retail sales, jobless rate
• EUR: Eurozone September trade balance, Q3 GDP and employment, November ZEW survey
• GBP: UK September unemployment, October jobless claims
• Brent: International Energy Agency releases monthly oil market report
• Former US President Donald Trump to make announcement
• Walmart 3Q earnings

Wednesday, November 16

• CNH: China October new home prices
• EUR: Speeches by ECB’s Christine Lagarde and Fabio Panetta
• GBP: UK October CPI, BOE Governor Andrew Bailey speech
• CAD: Canada October CPI
• USD: US October retail sales, industrial production; speeches by New York Fed President John Williams and Fed Vice Chair Lael Brainard
• US crude: EIA weekly oil inventory report

Thursday, November 17

• JPY: Japan October external trade
• AUD: Australia October unemployment
• EUR: Eurozone October CPI (final)
• GBP: UK Chancellor of the Exchequer Jeremy Hunt presents fiscal statement; speech by BOE’s Huw Pill and Silvana Tenreyro
• USD: US weekly initial jobless claims; speeches by Minneapolis Fed President Neel Kashkari, Fed Governor Philip Jefferson, Cleveland Fed President Loretta Mester
• Alibaba 3Q results

Friday, November 18

• JPY: Japan October CPI
• EUR: Speeches by ECB’s Christine Lagarde, Joachim Nagel, Klass Knot
• GBP: Speeches by BOE’s Catherine Mann and Jonathan Haskel
• USD: Speech by Boston Fed President Susan Collins

GBPUSD is about to head into this weekend on a 2-month high, having surged back above its 100-day simple moving average (SMA), thanks to the US dollar’s post-CPI tumble.

This currency pair, nicknamed “cable”, is now testing the mid-September high around 1.173, after building upon a series of higher-lows and higher-highs since careening towards parity.

Sterling’s resurgence of late has also been built on the optimism that the UK government will be on a better financial footing (or at least, it won’t be as bad as previously feared) under the new administration, following the removal of Liz Truss as Prime Minister along with her administration’s proposals for unfunded tax cuts.

However, such optimism would have to be vindicated when current UK Chancellor of the Exchequer, Jeremy Hunt, unveils the latest fiscal plans on Thursday.

Keep in mind that the UK government has a GBP 50 billion fiscal hole to fill.

Markets now expect Hunt to unveil some tax hikes as well as spending cuts, including a potential spending freeze after the UK’s next general election which may happen sometime in 2024.

In other words, this new UK government has to find ways to get more money into its coffers and avoid spending too much money, in order to shore up market confidence about the country’s financial health.

With this UK government’s credibility at stake, failure to shore up market confidence could see GBPUSD finding its way back to its 50-day SMA for support around the 1.133 region.

And of course, markets are still wary about the UK’s economic prospects, with the Bank of England just last week implying that the economy is currently in a recession and may continue contracting until mid-2024.

Against such a bleak outlook, the UK incoming jobs report and inflation data may offer scant relief. That should leave Hunt’s November 17th speech as the major catalyst for further GBPUSD gains, besides further declines in the US dollar.

At the time of writing, here are some forecasts for GBPUSD’s performance for the coming week (based on current levels):

• 59% chance of GBPUSD of revisiting 1.1599
• 47.6% chance of GBPUSD climbing by 2 big numbers from current levels to hit 1.19
• 33% chance of GBPUSD touching the early-October cycle high just below 1.1496
• 23.7% chance of GBPUSD staying above 1.190 over the next one week

Though to be fair, the options markets have become notably less bearish on GBPUSD’s immediate fortunes, with bearish one-week bets having halved since the start of November.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By Gemma Ware, The Conversation and Daniel Merino, The Conversation 

Indonesia plans to move its capital city from Jakarta on the island of Java to a new forest city on the island of Borneo called Nusantara. In this episode of The Conversation Weekly podcast, we talk to three experts in urban planning and ecology to find out why – and what the environmental impacts of the project could be.

Jakarta is a city struggling to keep its head above water. “It’s been attacked from both sides – from the river and from the land,” says Eka Permanasari, associate professor in urban design at Monash University, Australia.

The city experiences extreme amounts of rainfall, worsened by climate change, which regularly causes severe flooding. Coupled with this, massive extraction of ground water from aquifers underneath the city is causing the Jakarta to sink. “If you go to the northern part of Jakarta, you may see the road is higher than the houses next to it. In some other areas, it’s actually sinking more than 15cm per year,” says Permanasari.

Due to the problems facing Jakarta, plans to relocate Indonesia’s capital have a long history. During the colonial era, the Dutch considered abandoning the city, then called Batavia, due to flooding, high temperatures and disease linked to stagnant water. Since Indonesian independence in 1945, successive administrations have also floated plans to relocate the capital, but these never came to fruition.

Now, the government of President Joko Widodo, known as Jokowi, is forging ahead with a new project, estimated to cost around US$35 billion. In January, Indonesia’s parliament passed a bill to relocate the country’s capital city from Jakarta on the island of Java to the East Kalimantan province of Borneo. The government then announced the city’s name: Nusantara, which loosely translates as archipelago in sanskrit.

Hendricus Andy Simamarta is a lecturer in urban planning at the University of Indonesia and president of the Indonesian Association of Urban and Regional Planners. He says a big reason for relocating the capital is to shift Indonesia’s centre of gravity away from Java. “We are very dependent on Java economically, more than 50% of our economy is located in Java,” he says. Simamarta is sceptical that moving the capital to East Kalimantan will re-balance the economy, but he says at least it can start to “re-orientate our mindset of development”.

The dream for Nusantara is for a new high-tech, smart city, surrounded by forest. Borneo is an island with rainforests home to an abundance of different species, including orangutan and Asian elephants. However, Alex Lechner, an associate professor in landscape ecology at Monash University, Indonesia, who is based in Jakarta, says the area planned for Nusantara’s construction is currently covered by eucalyptus plantations – monocultures with less biodiversity than intact rainforest.

Lechner is impressed with eight principles set out for Nusantara’s development, including on carbon neutrality and circular economy approaches. “If it all looks like it’s looking like on paper, there’s potential for this city to be this shining example for southeast Asia of what green and sustainable development should look like,” he says.

But he’s also concerned about what might happen on Borneo outside Nusantara’s footprint. “What happens to all the development which this city encourages outside of the city boundaries? Is this going to be developed sustainably?” Lechner says if more roads are built to connect Nusantara to other parts of Borneo, this could produce a “fish-bone effect” with small roads leading off into the forest, which could have a “whole raft of cascading spillover effects on the environment and especially on diversity”.

Listen to the full episode to hear more about the challenges facing Jakarta and the plans – and politics – behind Nusantara.

This episode of The Conversation Weekly was produced by Mend Mariwany and Gemma Ware, with sound design by Eloise Stevens. Our theme music is by Neeta Sarl. You can find us on Twitter @TC_Audio, on Instagram at theconversationdotcom or via email. You can also sign up to The Conversation’s free daily email here.

Newsclips in this episode are from CNA News, Aljazeera English, France24 , The Jakarta Post, Media dan Informasi Sekretariat Presiden.
You can watch a video showing a digital rendering of the presidential palace, designed by the artist Nyoman Nuarta, here.

You can listen to The Conversation Weekly via any of the apps listed above, download it directly via our RSS feed, or find out how else to listen here.

Gemma Ware, Editor and Co-Host, The Conversation Weekly Podcast, The Conversation and Daniel Merino, Assistant Science Editor & Co-Host of The Conversation Weekly Podcast, The Conversation

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By JustMarkets

Global stock markets declined yesterday, and the US dollar rose against a basket of major currencies as the US Congressional election and President Joe Biden’s agenda remain unclear after the midterm vote. As the stock market closed, the Dow Jones index (US30) decreased by 1.95%, and the S&P 500 index (US500) lost 2.08%. Technology Index NASDAQ (US100) fell by 2.48% yesterday.

New inflation data will be released in the US today. Analysts forecast that the annual inflation rate will fall from 8.2% to 8%, while core inflation will drop from 6.6% to 6.5%. If the data falls within that range, the dollar index could see a sharp decline on the back of the fact that inflation has already peaked and the US Federal Reserve will be slowing the pace of interest rate hikes. That would give stock indices a boost. But if the data turn out to be worse than expected and the inflation indicators (especially the core inflation) show further growth, the dollar index, on the contrary, can get support, which will lead to a sharp drop in indices. Either way, a tight labor market underscores the relatively slow decline in inflation over the coming months, which was a major factor in this week’s midterm elections.

Federal Reserve Bank of Minneapolis President Neel Kashkari warned Wednesday that it is premature to expect a “dovish reversal” from the Fed and that interest rates will continue to rise. Fed spokesman Barkin said Wednesday that fighting inflation could lead to a downturn in the economy, but that’s a risk the Fed would have to take. This is not the first such statement by Fed policymakers. The only question is whether Fed policy will change after the US Congress reshuffles.

Stock markets in Europe were down yesterday. German DAX (DE30) decreased by 2.48%, French CAC 40 (FR40) fell by 0.17%, Spanish IBEX 35 (ES35) gained 0.52%, and British FTSE 100 (UK100) closed at minus 0.14%.

UK GDP is projected to be down by 0.5% in the third quarter, up from 0.2% in the second quarter. This could be the first of two necessary negative quarters to talk about a recession technically. Annual GDP growth is expected to fall to 2.1% from 4.4%. Analysts also forecast that UK investment will fall to 1.3% in the third quarter, down from 3.7% previously, and the industrial production index will fall to 4.3%, down from 5.2% previously. These factors could play an important role in how the market handles the GDP numbers tomorrow.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.56%, Hong Kong’s Hang Seng (HK50) lost 1.20%, and Australia’s S&P/ASX 200 (AU200) was up 0.58% by the end of the day.

An internal analysis of New Zealand’s central bank decisions over the past five years showed that a sharp easing of monetary policy was largely justified because of the pandemic, but in hindsight, monetary policy should have been tightened earlier in 2021.

Weak economic data from China released earlier this week caused more concern about the world’s second-largest economy, which is struggling to control the worst COVID outbreak since May. This has led to the reintroduction of COVID restrictions in several major economic centers. The economic turmoil in China has worsened attitudes toward most economies in the region.

Bank of Japan (BOJ) Governor Haruhiko Kuroda said Thursday that he has no desire to be re-elected to a new five-year term as head of the central bank after his current term expires next April. This increases the probability that the BOJ will change its monetary policy in the spring of 2023, as Kuroda is a fan of soft stimulative policies.

S&P 500 (F) (US500) 3,748.57 −79.54 (−2.08%)

Dow Jones (US30) 32,513.94 −646.89 (−1.95%)

DAX (DE40) 13,666.32 −22.43 (−0.16%)

FTSE 100 (UK100) 7,296.25 −9.89 (−0.14%)

USD Index 110.47 +0.84 (+0.76%)

• – FOMC Member Waller Speaks at 09:00 (GMT+2);
• – US Consumer Price Index (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
• – Canada BoC Gov Macklem Speaks at 18:50 (GMT+2);
• – US FOMC Member Mester Speaks at 19:30 (GMT+2);
• – US FOMC Member George Speaks 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.

By JustMarkets

The Dow Jones Index (US30) increased by 1.02% at Monday’s close, while the S&P 500 Index (US500) added 0.56%. The NASDAQ Technology Index (US100) jumped by 0.49% yesterday.

Preliminary results of the US congressional elections show a significant Republican lead, which means the US is close to a government split, likely derailing the Democrats’ big spending plans on social issues. This could lead to a rise in the dollar index, as the new Congress will want to deal with inflation more quickly and push the US Federal Reserve to raise interest rates even more aggressively. Republicans are willing to accept a recession, but only if it is quick.

Stock markets in Europe traded higher yesterday. The German DAX (DE30) gained 1.15%, the French CAC 40 (FR40) increased by 0.39%, the Spanish IBEX 35 (ES35) added 0.46%, the British FTSE 100 (UK100) closed up by 0.08%.

Sustained growth in German bond yields weakened the dollar amid expectations of further tightening of the European Central Bank policy, which led to a reduction in the spread with Treasury yields. Bank of Germany Governor Joachim Nagel said Tuesday that the ECB should not “give up too soon” and should keep raising rates even if it hurts growth. ECB Governing Council spokesman Pierre Wunsch pointed out yesterday that the European Central Bank may need to raise interest rates more than investors expect. The ECB’s monetary policy response will ultimately depend on the severity of the coming economic slowdown. Therefore, it is important for investors to gauge the performance of the region’s economy, especially GDP.

Gold prices jumped to a one-month high on Wednesday thanks to renewed demand for safe-haven assets and a weaker dollar due to uncertainty over the outcome of the US midterm elections.

Oil prices fell yesterday as industry data showed that US crude inventories rose more than expected. There are also growing concerns that the recovery of COVID-19 cases in the largest importer, China, will hurt demand for fuel. Last week, the oil market had pinned hopes that China might move to ease restrictions related to COVID, but officials said over the weekend that they would stick to their approach.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) gained 1.25%, Hong Kong’s Hang Seng (HK50) decreased by 0.23%, and Australia’s S&P/ASX 200 (AU200) added 0.36% by the end of the day.

China’s consumer price index was 2.1% y/y in October (forecast 2.4%). The producer price index was 1.3% y/y (forecast 1.5%). The slowdown in China also does not bode well for broader Asian markets, given the country’s role as a major trading hub. Sentiment toward China worsened this week after authorities said Beijing has no plans to roll back its strict zero COVID policy.

S&P 500 (F) (US500) 3,828.11 +21.31 (+0.56%)

Dow Jones (US30) 33,160.83 +333.83 (+1.02%)

DAX (DE40) 13,688.75 +155.23 (+1.15%)

FTSE 100 (UK100) 7,306.14 +6.15 (+0.084%)

USD Index 109.63 −0.50 (−0.43%)

• – China Consumer Price Index (m/m) at 03:30 (GMT+2);
• – China Producer Price Index (m/m) at 03:30 (GMT+2);
• – FOMC Member Williams Speaks at 10:00 (GMT+2);
• – US Crude Oil Reserves (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.