InvestMacro

On Friday, the Dow Jones (US30) rose 0.69% (for the week -0.50%). The S&P 500 Index (US500) gained 0.41% (for the week -1.80%). The NASDAQ Technology Index (US100) closed positive 0.72% (for the week -2.06%). Stocks in the US closed sharply higher on Friday, starting November with gains as strong earnings from Amazon (AMZN) and Intel (INTC) bolstered market sentiment, allowing traders to skip a disappointing jobs report. The US jobs report showed that only 12,000 jobs were created in October, well below expectations. Analysts attributed the weak data to the devastating effects of the hurricane and the Boeing strike.

On Wall Street, there is still near-unanimous expectation that the Federal Reserve will cut its key interest rate by a quarter percentage point on Thursday this week.

Nvidia (NVDA) will replace Intel (INTC) in the Dow Jones Industrial Average rankings, ending the semiconductor pioneer’s 25-year history of falling behind rivals. S&P Dow Jones Indices said Friday that the changes, effective November 7, were initiated to provide more representative exposure to the semiconductor and materials sectors, respectively. Intel’s share price has fallen more than 50% this year. Nvidia shares, in contrast, are up more than 173% this year.

Equity markets in Europe rose steadily on Friday. Germany’s DAX (DE40) gained 0.93% (for the week -1.40%), France’s CAC 40 (FR40) closed up 0.80% (for the week -1.76%), Spain’s IBEX 35 (ES35) gained 1.46% (for the week -0.23%), and the UK’s FTSE 100 (UK100) closed up 0.83% (for the week -0.87%).

Switzerland’s annual inflation rate fell to 0.6% in October 2024, the lowest since June 2021, down from 0.8% in September and below estimates of 0.8%. Markets currently give a 72% probability that the Central Bank will cut rates from 1% at its next meeting on December 12 to 0.75% and a 68% probability that it will cut again next March to 0.5%.

WTI crude oil prices rose to $71 a barrel on Monday, extending gains for a fourth straight session as OPEC+ decided to postpone December production plans for a second time. The decision is aimed at stabilizing prices amid ongoing economic concerns and averting a potential oversupply in the market, given uncertainty over demand growth.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) gained 0.78%, China’s FTSE China A50 (CHA50) fell by 1.54%, Hong Kong’s Hang Seng (HK50) lost 0.42%, and Australia’s ASX 200 (AU200) was negative 1.13%.

Beijing’s latest stimulus measures have started to have a positive impact ahead of next week’s session of the National People’s Congress, where new initiatives may be unveiled. Chinese authorities are expected to provide more details on debt and fiscal initiatives aimed at reviving economic growth. They are likely to consider a stimulus package in excess of ¥10 trillion to revitalize the economy.

Japan’s opposition party chief Yuichiro Tamaki, whom the ruling LDP is seeking support from after losing its majority in the lower house of parliament, said the Bank of Japan should wait at least six months before raising interest rates. Kiuchi believes the ruling party will have to accept the opposition party’s position that ultra-soft monetary policy should be maintained until wage growth is consistently above inflation.

At the end of Thursday, the Dow Jones (US30) Index was down 0.90%. The S&P 500 Index (US500) was down 1.86%. The NASDAQ Technology Index (US100) closed lower by 2.44%. Disappointing earnings forecasts from major tech giants Microsoft (MSFT) and Meta (META) raised concerns about their high artificial intelligence costs and potential pressure on profits. Meta (-4.1%) and Microsoft (-6%) reported significant increases in artificial intelligence spending, dampening investor optimism and weighing on shares of other major tech companies, including Nvidia (-4.7%) and Amazon (-3.4%).

Today, the US Nonfarm Payrolls report will be released. Economists believe the labor market will add only 111,000 jobs in October, down significantly from 254,000 in September. Strikes by major companies (including Boeing) and weather-related disasters are cited as the reason for the drop. The unemployment rate is expected to remain at 4.1%, and average hourly earnings are expected to rise slightly from 3.9% to 4.0% year-over-year. The weak report should support stock indices and gold after a sell-off in previous sessions.

Equity markets in Europe were steadily declining on Thursday. Germany’s DAX (DE40) fell by 0.83%, France’s CAC 40 (FR40) closed down 1.05%, Spain’s IBEX 35 (ES35) lost 0.36%, and the UK’s FTSE 100 (UK100) closed down 0.61% yesterday. After Eurozone inflation unexpectedly rose to 2% from 1.7% and exceeded the forecast of 1.9%, investors are betting that the ECB will maintain a cautious stance on rate cuts, supported by solid economic growth. This is putting pressure on European indices. Weak corporate reports are also contributing to the negativity. TotalEnergies shares fell by 3.2% to their lowest level since February after reporting lower net income and sales in the third quarter. BNP Paribas shares fell by 4.8% as its results failed to impress investors, although the lender reaffirmed its 2024 growth trajectory. In contrast, Airbus rose by 0.3% after its earnings and revenue beat forecasts. Société Générale shares rose by 11.7% to their highest level since June after beating third-quarter earnings expectations.

WTI crude oil prices rose to $71 per barrel on Friday, rising for the third consecutive session as market attention shifted back to the Middle East conflict. The change was prompted by a report that Iran may be preparing to launch an attack on Israel from Iraq in the coming days, with sources indicating that the alleged attack could involve drones and ballistic missiles. Investors remained on edge, especially after Israel’s military chief warned that any further missile attacks would be followed by a “very hard” strike on Iran.

The US natural gas (XNG/USD) prices fell to below $3.75/mmbtu, down sharply from a four-month high of $3.1, amid falling risk premiums and evidence of ample domestic supply. Adding to this was data from Wood Mackenzie showing that US production rose to 103 bcf/d at the end of October, close to a record high. That matched a significant rise in inventories in the fourth week of the month when EIA data indicated a 78 billion cubic feet increase.

Asian markets were mostly down on Thursday. Japan’s Nikkei 225 (JP225) fell by 0.50%, China’s FTSE China A50 (CHA50) lost 0.50%, Hong Kong’s Hang Seng (HK50) decreased by 0.31% and Australia’s ASX 200 (AU200) was negative 1.04% for yesterday.

Hong Kong stocks rose by 1% on the first trading day of November, reversing losses from the previous two sessions amid gains across sectors. Traders welcomed private survey data showing that China’s manufacturing sector returned to growth in October after a series of stimulus measures taken by Beijing in late September, which coincided with official data.

In Australia, mixed economic data clouded the Reserve Bank of Australia’s (RBA) policy outlook. Producer prices rose more than expected in the third quarter, while retail sales slowed significantly in September. In addition, earlier data showed that the annual average consumer price index, the RBA’s preferred measure of inflation, fell only slightly to 3/5% in the third quarter, remaining above the target range of 2%-3%. Markets largely expect the RBA to keep rates unchanged at 4.35% during its upcoming meeting next week.

Indonesia’s annual inflation rate fell to 1.71% in October 2024, the lowest since October 2021, while remaining within the central bank’s target range of 1.5% to 3.5%. Core inflation hit a 15-month high of 2.21% from September’s 2.09%.

The Dow Jones (US30) Index was down 0.22% on Wednesday. The S&P 500 Index (US500) was down 0.33%. The NASDAQ Technology Index (US100) closed lower by 0.79%. Stocks gave up early gains and suffered moderate losses as declines in chip company stocks impacted the broader market. AMD closed down more than 10%, leading to a decline in chip company stocks after fourth-quarter revenue guidance came in below consensus.

Better-than-expected US economic news on Wednesday boosted the outlook for a soft landing and lent support to the US dollar after Q3 personal consumption rose more than expected and the October ADP employment report showed employers added the most jobs in 15 months.

Shares of Garmin Ltd (GRMN) rose more than 23% and topped the S&P 500 leaderboard after the company reported third-quarter revenue of $1.59 billion, above the consensus estimate of $1.43 billion. Snap Inc (SNAP) closed higher by more than 15% after reporting 443 million daily active users in the third quarter, above the consensus projection of 441.16 million.

Equity markets in Europe were steadily declining on Wednesday. Germany’s DAX (DE40) fell by 1.13%, France’s CAC 40 (FR40) closed down 1.10%, Spain’s IBEX 35 (ES35) lost 0.68%, and the UK’s FTSE 100 (UK100) closed down 0.73%. European equity markets were set for declines on Thursday, marking the third consecutive session of declines as investors awaited preliminary inflation data from the region that could influence the European Central Bank’s approach to cutting interest rates. The overall inflation rate is expected to rise to 1.9% y/y from 1.7%, while core inflation (excluding food and energy prices) is expected to fall to 2.6% y/y from 2.7%.

Eurozone inflation will reach the European Central Bank’s 2% target during 2025, ECB President Christine Lagarde said in an interview with a French newspaper, largely echoing her recent statement.

WTI crude oil prices rose to around $69 a barrel on Thursday, extending gains of more than 2% from the previous session, helped by an unexpected decline in US inventories. EIA data showed that US crude inventories fell by 0.5 million barrels last week, contradicting market expectations of a 2.3 million barrel increase. However, bearish pressure remains due to weak demand from China (the largest importer), while investors are assessing the supply outlook following reports that OPEC+ may postpone its planned December oil production increase by a month or more.

Asian markets were mostly down on Wednesday. Japan’s Nikkei 225 (JP225) rose by 0.96%, China’s FTSE China A50 (CHA50) fell by 1.02%, Hong Kong’s Hang Seng (HK50) lost 1.55% and Australia’s ASX 200 (AU200) was negative 0.83%.

Hong Kong stocks were up 0.7% from Thursday’s market open, partially recovering from the previous day’s decline amid gains across all sectors. Traders reacted to official PMI data for October, which showed factory activity in China rose for the first time in six months following a series of new stimulus measures designed to reverse slowing economic growth. Meanwhile, growth in the services sector was solid.

The Bank of Japan (BoJ) unanimously kept its key short-term interest rate unchanged at around 0.25% at its October meeting. The BoJ remains bullish on further rate hikes if economic and price data matches its estimates. In its quarterly prognoses, the BoJ maintained its projection that core inflation will reach 2.5% in fiscal 2024, while inflation is expected to reach 1.9% in fiscal 2025 and 2026. As for GDP, the Central Bank maintained its growth estimate for 2024 at 0.6%. It also expects growth of 1.1% in FY 2025 and 1.0% in FY 2026.

Retail sales in Australia rose by 0.1% in September, well below the 0.7% increase recorded in August and below projections for a 0.3% increase as the positive effect of warmer weather in August wore off. In addition, a mixed quarterly domestic inflation report released earlier this week lowered expectations for an immediate rate cut by the Reserve Bank of Australia (RBA). Markets largely expect the RBA to keep rates at 4.35% at its upcoming meeting next week, with the first-rate cut not expected until May next year.

At the end of Tuesday, the Dow Jones Index (US30) fell by 0.36%. The S&P 500 Index (US500) was up 0.16%. The NASDAQ Technology Index (US100) closed higher by 0.98%.

The latest data from the JOLTs report showed that job openings are at their lowest level since January 2021, along with increased layoffs. In contrast, the Central Bank’s Consumer Confidence Index rose sharply, posting its highest increase since March 2021. Despite the mixed signals, the dollar remained near its highest levels in three months, helped by expectations that the Fed will take a more cautious approach to its easing strategy. In addition, speculation surrounding Donald Trump’s possible victory in the November 5 election lent further support to the currency as his policies on tariffs, taxes and immigration are perceived to be inflationary.

In after-hours trading, shares of Alphabet (GOOG) were up nearly 6% following impressive quarterly revenue growth in its cloud division. Snap (SNAP) and Reddit were also up significantly, climbing 10.6% and 24.8%, respectively, thanks to strong quarterly results. AMD (AMD), however, suffered a downturn, falling 7.6% after posting weak fourth-quarter earnings guidance.

Equity markets in Europe were steadily declining on Tuesday. Germany’s DAX (DE40) fell by 0.27%, France’s CAC 40 (FR40) closed down 0.61%, Spain’s IBEX 35 (ES35) lost 0.91%, and the UK’s FTSE 100 (UK100) closed down 0.80%. European stock markets were set for declines on Wednesday as investors prepared for the latest GDP and inflation data from the region, as well as the UK government’s budget announcement. It is also a busy day for corporate earnings as reports from such large companies are scheduled. Notable earnings news included Swiss lender UBS reporting a third-quarter profit of $1.43 billion, well above estimates of $667.5 million, thanks to the successful integration of clients from Credit Suisse. UK-based Standard Chartered also reported earnings that exceeded projections and raised its revenue outlook for 2024.

WTI crude prices rose to around $67.5 a barrel on Wednesday after two consecutive declines, helped by an unexpected drop in US inventories. API data showed that US crude inventories fell by 0.6 million barrels last week, contradicting expectations of a 2.3 million barrel increase. Nevertheless, the downward trend persists as investor attention has shifted to weak fundamentals, including weak Chinese demand and ample supply, while traders await December OPEC+ production plans.

Silver (XAG/USD) rose to $34 an ounce on Tuesday, following gains in gold prices as uncertainty surrounding the US presidential election and tensions in the Middle East continue to drive demand for precious metals.

Asian markets were mostly rising on Monday. Japan’s Nikkei 225 (JP225) rose by 0.77%, China’s FTSE China A50 (CHA50) fell by 0.78%, Hong Kong’s Hang Seng (HK50) gained 0.49% and Australia’s ASX 200 (AU200) was positive 0.34%.

The offshore yuan fell to around 7.15 per dollar as traders are cautious ahead of the expected China PMI data to be released tomorrow. The data is expected to shed light on the impact of the latest stimulus measures. In addition, traders await the National People’s Congress meeting scheduled for November 4–8 for more details on the anticipated fiscal support measures.

In Australia, annual inflation fell to 2.8% in the third quarter, down from 3.8% in the previous quarter and slightly below the expected 2.9%. This marked the first time inflation has returned to the Reserve Bank of Australia’s (RBA) target range of 2–3% since the end of 2021. Core inflation, which is closely monitored by the Reserve Bank, also fell to 3.5% from 4%, which was in line with expectations. The latest inflation data suggests that price pressures in the country are easing, giving the Central Bank an opportunity to consider a rate cut at one of its last meetings of the year.