InvestMacro

By JustMarkets

As of Friday’s stock market close, the Dow Jones Index (US30) decreased by 0.11%, and the S&P 500 Index (US500) was down by 0.54%. The NASDAQ Technology Index (US100) closed negative 0.84% on Monday, hitting a 3-week low. Yesterday’s rise in bond yields pressured technology stocks and lowered the broad market. Bond yields are rising on concerns that markets may be overly optimistic about the Fed’s chances of cutting interest rates by the second quarter of 2024. Markets forecast a 68% probability of a 25 bps rate cut at the March 19-20, 2024, FOMC meeting and a fully discounted (137% probability) probability of a 25 bps rate cut at the April 30-May 1, 2024, FOMC meeting.

This week, markets await JOLTS openings, ADP national employment, and US monthly payrolls reports to gauge the strength of the US labor market and whether additional monetary tightening is appropriate. US factory orders in October fell by 3.6% m/m, weaker than expectations of 3.0% m/m and the biggest decline in 3 years. This indicates weak demand for industrial metals, which put additional pressure on silver.

Nvidia (NVDA) shares fell more than 3% yesterday on signs of insider selling after Washington Service data showed that Nvidia executives sold $180 million worth of stock last month.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) rose by 0.04%, France’s CAC 40 (FR40) fell by 0.18% on Monday, Spain’s IBEX 35 (ES35) jumped by 0.37%, and the UK’s FTSE 100 (UK100) closed negative 0.22%.

ECB Governing Council representative Centeno warned yesterday that the labor market implications of excessive monetary tightening could be swift when the economy turns around. His counterpart, ECB Vice President Guindos, indicated that the ECB cannot yet say that inflation is under control as the ECB sees large wage growth in some parts of the Eurozone, which could lead to additional price pressures. Eurozone Investor Confidence Index for December from Sentix rose by 1.8 to minus 16.8, which was weaker than expectations of minus 15.6. German trade balance data was weaker than expected, with October exports unexpectedly falling by 0.2% m/m, which was weaker than expectations of 1.1% m/m. Imports also fell by 1.2% m/m, weaker than expectations of 0.8% m/m.

Swaps tied to ECB meeting dates estimate a 73% probability that the ECB will cut the benchmark rate by 25 bps at the March 7 meeting and more than estimated (+150%) that rate cut by 25 bps at the April 11 ECB meeting.

The dollar index rally to 1-week highs on Monday was bearish for energy prices. Crude oil was also pressured by the negative impact of last Thursday’s events, when OPEC+ said it would cut oil production levels by 1.0 mln bpd, but did not provide details on how the cut would be implemented. Oil prices were supported by concerns that attacks on oil tankers in the Middle East could disrupt crude supplies. The US Central Command said there were four missile and drone attacks on three separate commercial vessels operating in international waters in the Red Sea on Sunday. Iranian-backed Houthis rebels claimed responsibility for the attacks.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.60%, China’s FTSE China A50 (CHA50) was down by 0.70% yesterday, Hong Kong’s Hang Seng (HK50) lost 1.09% on the day, and Australia’s ASX 200 (AU200) was positive 0.73% on Monday.

Australia’s Central Bank left interest rates unchanged at 4.35% on Tuesday as expected, giving itself more time to assess the economy and decide whether to tighten further next year. RBA chief Bullock maintained the same policy tightening bias, saying the need for further rate hikes will depend on data and a changing risk assessment. Markets expect an early rate cut by the US Federal Reserve and the European Central Bank in 2024, with a drop of more than 100 basis points, while the RBA may just cut the rate by 15 basis points late next year. That would stabilize the Australian currency against the dollar and euro next year.

Core inflation in Japan’s capital slowed in November, confirming the central bank’s view that cost pressures in the world’s third-largest economy will gradually ease. The core consumer price index (CPI), which excludes food prices but includes fuel costs, came in at 2.3% y/y in Tokyo, down from 2.7% y/y in October. Bank of Japan Governor Kazuo Ueda emphasized the need to maintain ultra-loose policy until inflation driven by recent cost increases is replaced by demand-driven price increases backed by strong wage increases. Revised real gross domestic product (GDP) data on Friday is expected to show that Asia’s second-largest economy contracted by 2.0% in the third quarter, which would be negative for the Japanese currency.

S&P 500 (US500) 4,569.78 −24.85 (−0.54%)

Dow Jones (US30) 36,204.44 −41.06 (−0.11%)

DAX (DE40)  16,404.76 +7.24 (+0.044%)

FTSE 100 (UK100) 7,512.96 −16.39 (−0.22%)

USD Index  103.63 +0.36 (+0.35%)

• – Japan Tokyo Core CPI (m/m) at 01:30 (GMT+2);
• – China Caixin Services PMI (m/m) at 04:45 (GMT+2);
• – Australia RBA Interest Rate Decision at 05:30 (GMT+2);
• – Australia RBA Rate Statement at 05:30 (GMT+2);
• – German Services PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – Eurozone Producer Price Index (m/m) at 11:00 (GMT+2);
• – UK Services PMI (m/m) at 11:30 (GMT+2);
• – US ISM Services PMI (m/m) at 17:00 (GMT+2);
• – US JOLTS Job Openings (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 JustMarkets

At Friday’s close, the Dow Jones Index (US30) was up by 0.82% (+2.46% for the week), while the S&P 500 Index (US500) was up by 0.59% (+0.87% for the week). The NASDAQ Technology Index (US100) closed positively by 0.55% (+0.46% for the week) on Friday. Stocks were boosted by the latest economic data, as well as dovish comments from US Fed chief Jerome Powell.

The ISM Manufacturing Index for November was unchanged at 46.7, which was weaker than expectations of a rise to 47.8 and was the 13th consecutive month of contraction in manufacturing activity. Dovish comments from the Fed on Friday put pressure on the dollar. Fed Chair Powell signaled that the Fed will leave interest rates unchanged at the December 12-13 FOMC meeting.

Canada added 24,900 jobs in November, 15,000 more than analysts had forecast, with the unemployment rate rising to 5.8% from 5.7%. Bank of Canada Governor Tiff Macklem said in a recent speech that “interest rates can now be quite restrictive” as excess demand has disappeared and weak growth is expected to persist, leading most to conclude that the central bank has peaked on rates this cycle and the BoC is expected to leave rates unchanged this Wednesday. That said, polls suggest the Bank of Canada will start cutting interest rates in the second quarter of next year as inflation slows and the economy grows. Economists believe the underlying cost of borrowing will fall by at least one percentage point by the end of 2024.

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) rose by 1.12% (+2.44% for the week), France’s CAC 40 (FR40) gained 0.48% (+0.73% for the week), Spain’s IBEX 35 (ES35) jumped by 0.82% (+2.15% for the week), and the UK’s FTSE 100 (UK100) closed positively by 1.01% (+0.55% for the week).

The European Central Bank (ECB) should not cause “unnecessary damage” to the economy and financial stability by keeping interest rates high, new Bank of Italy Governor Fabio Panetta said on Thursday. Panetta, a spokesman for the ECB’s governing council, added that the round of monetary tightening, which saw a streak of 10 consecutive rate hikes through September, has yet to have its full impact and will continue to dampen demand going forward. In his first major speech since taking the helm of Italy’s central bank, Panetta warned that the eurozone economy would remain weak in the final three months of this year and that risks to the economy were tilted to the downside. Market swaps tied to ECB meeting dates estimate an 81% probability that the ECB will cut the benchmark rate by 25 bps at its March 7 meeting and more than estimated (+183%) the probability of a 25 bps rate cut at the ECB’s April 11 meeting.

On Friday, crude oil prices were pressured by Thursday’s negative impact when OPEC+ said it would cut oil production levels by 1.0 million bpd, but did not provide details on how the cut would be implemented. The market is disappointed that additional OPEC oil production cuts will be announced by each country individually, suggesting that the cuts can only be voluntary. The rift between Angola and other OPEC+ members persists and is bearish, signaling increasing infighting between members of the organization.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) was down by 0.83% for the week, China’s FTSE China A50 (CHA50) decreased by 2.53% for the 5 trading days, Hong Kong’s Hang Seng (HK50) lost 4.79% for the week, and Australia’s ASX 200 (AU200) was positive 0.46% for the week.

An interest rate survey conducted from November 29 to December 1 showed that 28 out of 30 economists, including representatives from Australia’s four largest banks, expect the Central Bank of Australia (RBA) to leave the official money rate unchanged on December 5.

Bank Indonesia (BI) will keep the benchmark rate at the current level until 2024 unless there are any major changes in global dynamics, Bank Governor Perry Warjiyo said on Wednesday, signaling the central bank has completed its rate hike cycle. Warjiyo said the benchmark 7-day rate at 6% should be enough to keep domestic inflation within the target range of 1.5% to 3.5% in 2024 and 2025. The bank’s inflation target range for this year is between 2% and 4%. BI has raised interest rates by a total of 250 basis points between August 2022 and October, with the latest rate hike in response to a sharp fall in the rupee amid capital outflows associated with US monetary tightening.

S&P 500 (US500) 4,594.63 +26.83 (+0.59%)

Dow Jones (US30) 36,245.50 +294.61 (+0.82%)

DAX (DE40) 16,397.52 +182.09 (+1.12%)

FTSE 100(UK100) 7,529.35 +75.60 (+1.01%)

USD Index 103.19 −0.30 (−0.29%)

• – German Trade Balance (m/m) at 09:00 (GMT+2);
• – Switzerland Consumer Price Index (m/m) at 09:30 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 16:00 (GMT+2);
• – US Factory Orders (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 JustMarkets

At Thursday’s close, the Dow Jones Index (US30) was up by 1.47%, while the S&P 500 Index (US500) added 0.38%. The NASDAQ Technology Index (US100) closed negative by 0.23% on Thursday. Stocks found support in US economic reports that showed jobless claims rose to a 2-year high and October core PCE rose less than expected, reinforcing expectations that the Federal Reserve has stopped raising interest rates.

Weekly jobless claims rose by 86,000 to a 2-year high of 1.927 million, indicating a weaker labor market than expectations of 1.865 million. In addition, the October core PCE deflator, the Fed’s preferred measure of inflation, declined to 3.5% y/y from 3.7% y/y in September, which matched expectations and was the slowest rate of increase in 2 years. However, hawkish comments from New York Fed President Williams and San Francisco Fed President Daly pushed bond yields higher and negatively impacted tech stocks as they dampened speculation that the Fed will soon cut interest rates.

Markets rate the probability of a 25 bps rate hike at the next FOMC meeting on December 12-13 at 4% and the probability of a 25 bps rate hike at the next FOMC meeting on January 30-31, 2024 as 0%. Markets also factor in a 47% probability of a 25 bps rate cut at the March 19-20, 2024 FOMC meeting and a more than 100% probability of the same 25 bps rate cut at the April 30-May 1, 2024 FOMC meeting. As recently as a week ago, the probability of a rate cut in May was 57%.

Salesforce Inc (CRM) shares are up more than 6% at the open, leading the S&P 500 and Dow Jones Industrials higher after the company reported Q3 adjusted EPS of $2.11, better than the consensus of $2.06 and raised its 2024 adjusted EPS guidance. Shares of Snap (SNAP) are up more than 7% after investment bank Jefferies upgraded the stock to a “hold” from a “buy” with a $16 price target. Pinterest (PINS) is up by more than 3% after Jefferies upgraded the stock to a “buy” from a “hold” rating with a $41 price target.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.30%, France’s CAC 40 (FR40) gained 0.59%, Spain’s IBEX 35 (ES35) declined by 0.04%, and the UK’s FTSE 100 (UK100) closed positive 0.41%.

European stocks rose after the Eurozone’s consumer price index rose less than expected, pushing down 10-year German bond yields. A weaker-than-expected Eurozone CPI report for November reinforced expectations that the ECB is done raising interest rates. Eurozone CPI for November fell to 2.4% y/y from 2.9% y/y, better than expectations of 2.7% y/y and the smallest increase in 2 years. Core CPI for November also declined to 3.6% y/y from 4.2% y/y in October, better than expectations of 3.9% y/y. Weakening price pressures indicated that swap markets have priced in a 100% ECB rate cut of 25 bps for the ECB meeting on April 11.

On Thursday, OPEC+ countries agreed to cut oil production by 1.0 million bpd through June 2024. However, crude prices fell on the news as no details were provided on how the cut would be distributed among the organization’s representatives and how Russia’s 300,000 bpd export cut would be factored into the new totals. Delegates said the final details of the new agreement, including national production levels, would be announced by each country separately rather than in the usual OPEC+ communiqué. Investors reacted with disappointment as the rift between Angola (Africa’s second-largest oil producer) and other OPEC+ representatives persists and is a bearish factor, signaling more disputes within. On Thursday, Saudi Arabia said it would maintain its unilateral oil production cut of 1.0 million bpd through June 2024. The move would keep Saudi oil output at around 9 million bpd, the lowest in three years.

Natural gas prices declined for the fifth consecutive session on Thursday. The EIA’s unexpected increase in weekly natural gas inventories on Thursday pressured prices. The EIA reported that natural gas inventories rose by 10 bcf last week versus expectations of a 6 bcf decline. High inventories due to carryover balances from the mild winter of 2022/23 and weak heating demand have led to lower natural gas prices. As of November 26, natural gas storage in Europe is 97% full, above the 5-year seasonal average.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was up by 0.50% for the day, China’s FTSE China A50 (CHA50) lost 0.17%, Hong Kong’s Hang Seng (HK50) added 0.29% on Thursday, and Australia’s ASX 200 (AU200) was positive 0.74%.

Economic news from Japan on Thursday was mixed for the JP225 index. On the bearish side, October retail sales unexpectedly fell by 1.6% m/m, which was weaker than expectations of a 0.4% m/m increase and was the biggest decline in 2 years. In contrast, the consumer confidence index for November unexpectedly rose by 0.4 to 36.1, stronger than expectations of a decline to 35.6. In addition, industrial production for October rose by 1.0% m/m, stronger than expectations of 0.8% m/m and the largest increase in the last 4 months.

In China, Caixin’s manufacturing Purchasing Managers’ Index (PMI) rose to 50.7 in November, beating expectations of 49.3 and sharply improving from the 49.6 seen in the previous month. The reading contradicts the government’s PMI data released on Thursday, which showed a larger-than-expected decline in manufacturing activity. However, the Caixin survey differs from the government survey in its coverage, as it focuses more on small private enterprises, as opposed to the large state-owned enterprises covered by the official survey. Investors typically use both surveys to get a broader picture of the Chinese economy.

S&P 500 (US500) 4,567.80 +17.22 (+0.38%)

Dow Jones (US30) 35,950.89 +520.47 (+1.47%)

DAX (DE40) 16,215.43 +48.98 (+0.30%)

FTSE 100(UK100) 7,453.75 +30.29 (+0.41%)

USD Index 103.52 +0.76 (+0.74%)

• – Japan Unemployment Rate (m/m) at 01:30 (GMT+2);
• – Switzerland GDP (q/q) at 10:00 (GMT+2);
• – German Manufacturing PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+2);
• – Canada Unemployment Rate (m/m) at 15:30 (GMT+2).
• – Canada Manufacturing PMI (m/m) at 16:30 (GMT+2);
• – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+2);
• – US Fed Chair Powell Speaks at 18:00 (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 JustMarkets

As of Wednesday’s stock market close, the Dow Jones Index (US30) increased by 0.04%, while the S&P 500 Index (US500) lost 0.09%. The NASDAQ Technology Index (US100) closed negative by 0.16%. Stocks came under moderate pressure yesterday amid hawkish comments from FRB President Richmond Barkin, who said the Fed should keep the possibility of interest rate hikes on the table.

The US Q3 GDP was revised upward, and the Q3 core deflator was revised downward, reinforcing speculation that the US economy continues to grow at a moderate pace with easing price pressures, which would allow the Fed to end its interest rate hike campaign.

General Motors (GM) shares rose more than 9% after the company said it would increase its dividend by 33% and implement a $10 billion share buyback program.

The US personal income and spending data will be released today, as well as the core PCE price index, which is the US Federal Reserve’s preferred measure of inflation. PCE inflation is forecast to slow, with the reading expected to fall from 3.7% to 3.5% y/y on an annualized basis. The incoming data will reinforce the view that inflation and the broader economy are cooling. Markets are likely to take this as a sign that the Fed will have to start cutting rates by the summer of 2024.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) rose by 1.09%, France’s CAC 40 (FR40) added 0.24% on Wednesday, Spain’s IBEX 35 (ES35) jumped by 0.59%, and the UK’s FTSE 100 (UK100) closed negative by 0.43%. Slowing price pressures in Germany and Spain pushed European government bond yields lower on Wednesday and pressured the euro. German inflation fell from 3.8% to 3.2% (3.5% expected), a 2.5-year low. Spanish inflation fell from 3.5% to 3.2% (expectation of 3.7%). Eurozone inflation data will be released today. The ECB’s preferred core consumer price index is expected to fall from 4.2% to 3.9% year-on-year.

The Eurozone Economic Confidence Index for November rose by 0.3 to a 4-month high of 93.8, exceeding expectations of 93.6. ECB Governing Council representative Stournaras warned against premature rate cuts by the ECB, pointing out that current economic data figures seem optimistic.

The OPEC+ group, which includes the Organization of the Petroleum Exporting Countries and its allies, will meet today. Disagreements among OPEC+ representatives over oil production levels have caused the group’s meeting to be postponed from Sunday (November 26) to this Thursday (November 30) and put pressure on oil prices. Saudi Arabia, which has unilaterally cut oil production by 1.0 million bpd since July, is now asking other OPEC+ members to lower oil production levels, which has prompted a backlash from some African oil producers, including Angola and Nigeria. OPEC+ delegates have said they are moving toward a compromise but have yet to reach an agreement. The talks are focused on additional production cuts, and if the parties manage to reach an agreement, it would be a green light for oil to continue to push prices higher in the coming weeks.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.26% for the day, China’s FTSE China A50 (CHA50) lost 0.62%, Hong Kong’s Hang Seng (HK50) was down by 2.08% on Wednesday, while Australia’s ASX 200 (AU200) was positive by 0.29%.

Purchasing Managers Index (PMI) data showed that manufacturing activity in China contracted more than expected in November. Non-manufacturing recorded its weakest monthly growth in 2023, while overall business activity also approached the contraction zone last seen during the height of the COVID-19 crisis. The figures have heightened fears of a slowdown in China’s economy, especially as demand in major exporting countries deteriorates. However, traders are also betting that the trend will attract broader stimulus measures from Beijing.

S&P 500 (F)(US500) 4,550.59 −4.30 (−0.09%)

Dow Jones (US30) 35,430.55 +13.57 (+0.04%)

DAX (DE40)  16,166.45 +173.78 (+1.09%)

FTSE 100 (UK100) 7,423.46 −31.78 (−0.43%)

USD Index  102.86 +0.12 (+0.11%)

• – Japan Retail Sales (m/m) at 01:50 (GMT+2);
• – Japan Industrial Production (m/m) at 01:50 (GMT+2);
• – China Manufacturing PMI (m/m) at 03:30 (GMT+2);
• – China Non-Manufacturing PMI (m/m) at 03:30 (GMT+2);
• – German Retail Sales (m/m) at 09:00 (GMT+2);
• – Switzerland Retail Sales (m/m) at 09:30 (GMT+2);
• – Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+2);
• – German Unemployment Rate (m/m) at 10:55 (GMT+2);
• – OPEC+ meeting at 12:00 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – US PCE Price index (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – Canada GDP (q/q) at 15:30 (GMT+2);
• – Eurozone ECB President Lagarde Speaks (m/m) at 15:30 (GMT+2);
• – US FOMC Member Williams Speaks at 16:05 (GMT+2);
• – US Chicago PMI (m/m) at 16:45 (GMT+2);
• – US Pending Home Sales (m/m) at 17:00 (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

At Tuesday’s close, the Dow Jones Index (US30) increased by 0.24%, while the S&P 500 Index (US500) was up by 0.10%. The NASDAQ Technology Index (US100) closed positively by 0.29% on Tuesday. Meanwhile, the Dow Jones Industrials (US30) index rose to a 3-month-high. Stocks rose on Tuesday thanks to dovish comments from Fed spokesman Waller, which lowered the 10-year T-note yield and reinforced expectations that the Fed has stopped raising interest rates. At the same time, the likelihood of a rate cut from the US Fed starting in May-June 2024 is increasing. Fed funds futures suggest about 85 bps of cumulative interest rate cuts by December 2024.

Economic news from the US on Tuesday was mixed for the dollar. On the bearish side, the Richmond Fed’s November manufacturing survey fell from 8 to 5. In addition, the Conference Board’s US Consumer Confidence Index for November rose by 2.9 to 102.0, stronger than expectations of 101.0. Today, the US will release its GDP report for the quarter. The data is expected to be revised upward, which could temporarily support the dollar and put pressure on stock indices.

Warren Buffett confidant Charlie Munger died Tuesday at the age of 99. Munger would have turned 100 on January 1. Despite a well-developed succession plan at the conglomerate, analysts believe such a man will be impossible to replace.

Equity markets in Europe traded yesterday without any dynamics. Germany’s DAX (DE40) rose by 0.16%, France’s CAC 40 (FR40) fell by 0.21% on Tuesday, Spain’s IBEX 35 (ES35) jumped by 0.70%, and the UK’s FTSE 100 (UK100) closed negative by 0.07%.

Germany will release inflation data today. Consumer prices are expected to fall from 3.8% to 3.5% y/y. Lower inflationary pressures may have a negative impact on the euro as it will weaken the ECB’s hawkish rhetoric on inflation.

The representative of the ECB Governing Council and President of the Bundesbank Nagel said yesterday that it is premature for the ECB to discuss interest rate cuts. This complements ECB chief Lagarde’s words on Friday that the ECB has done enough, and now is the time to keep rates at current levels and analyze economic data.

Oil rose on Wednesday amid investor caution ahead of a crucial OPEC+ meeting to decide production policy in the coming months, while supply disruptions caused by a storm in the Black Sea supported prices. OPEC+ will hold an online meeting of ministers on Thursday to discuss production targets for 2024 after the meeting was postponed from November 26. According to some OPEC+ sources, the talks will be difficult, and it is possible that countries may not be able to agree on further production cuts. This would be a negative signal for oil.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.12% for the day, China’s FTSE China A50 (CHA50) was down by 0.96%, Hong Kong’s Hang Seng (HK50) fell by 0.98%, and Australia’s ASX 200 (AU200) was up by 0.29%.

The Central Bank of New Zealand (RBNZ) left the money rate unchanged at 5.5% on Wednesday but noted that inflation remains too high and that further policy tightening may be needed if price pressures do not ease. The “hawkish” tone of the statement surprised many in the market, leading to a rise in the New Zealand dollar and bond yields. The new center-right government said Wednesday it will begin the legislative process to return the central bank to a single mandate for inflation targeting. The change would remove the requirement for the RBNZ to consider employment levels when setting the money rate and focus solely on inflation.

Australian inflation fell more than expected in October as commodity prices fell and core inflation also declined, confirming the central bank’s decision to leave interest rates unchanged next week. Data from the Australian Bureau of Statistics on Wednesday showed the inflation rate fell to 4.9% (5.2% expected) from 5.6% annually. However, financial markets still believe the RBA will maintain its hawkish rhetoric in December. The probability of a further rate hike to 4.60% in the first half of next year is around 50%.

Bank of Japan board spokesman Adachi said it was premature to discuss an exit from negative interest rates, suggesting it could take all next year to determine whether wages will rise enough to abandon ultra-loose monetary policy. The remarks by Adachi, who is considered one of the board’s dovish policymakers, came amid growing market expectations on Wednesday that the BoJ could take short-term interest rates out of negative territory as early as January.

Main market quotes:

S&P 500 (US500) 4,554.89 +4.46 (+0.098%)

Dow Jones (US30) 35,416.98 +83.51 (+0.24%)

DAX (DE40) 15,992.67 +26.30 (+0.16%)

FTSE 100 (UK100) 7,455.24 −5.46 (−0.073%)

USD index 102.74 −0.46 (−0.45%)

• – Australia Consumer Price Index (m/m) at 02:30 (GMT+2);
• – RBNZ Interest Rate Decision at 03:00 (GMT+2);
• – RBNZ Monetary Policy Statement at 03:00 (GMT+2);
• – RBNZ Press Conference at 04:00 (GMT+2);
• – German Consumer Price Index (m/m) at 15:00 (GMT+2);
• – US GDP (q/q) at 15:30 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
• – US FOMC Member Mester Speaks at 20:45 (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

At Monday’s stock market close, the Dow Jones Industrial Average (US30) was down by 0.16%, while the S&P 500 Index (US500) was down by 0.20%. The NASDAQ Technology Index (US100) closed negative 0.07% on Monday.

Monday’s US economic news was weaker than expected and was bearish for both the dollar and the broad equity market. October new home sales fell by 5.6% m/m to 679.000, which was weaker than expectations of 721.000. In addition, the Dallas Fed’s November forecast for overall business activity in the manufacturing sector unexpectedly fell by 0.7 to a 4-month low of minus 19.9, which was weaker than expectations for an increase to minus 16.0. In terms of technical analysis, a divergence has formed in the US stock indices, indicating an impending correction.

Shopify (SHOP) shares rose by more than 3% yesterday after the company reported that merchants set a Black Friday record with sales totaling $4.1 billion. Adobe Analytics (ADBE) raised its Cyber Monday sales forecast to $12.4 billion from an initial forecast of $12 billion after reporting that US shoppers spent a record $9.8 billion online on Black Friday. Additionally, Salesforce Inc. (CRM) data showed that US online sales on Black Friday were up by 9% year-over-year.

As of today, markets are forecasting a 6% probability of a 25 bps rate hike at the next FOMC meeting on December 12-13 and a 12% probability of a 25 bps rate hike at the January 30-31, 2024 FOMC meeting. Markets also factor in a 15% probability of a minus 25 bps rate cut at the March 19-20, 2024 FOMC meeting and a 57% probability of the same 25 bps rate cut at the April 30-May 1, 2024 FOMC meeting.

The Canadian dollar gained bullish momentum, helped by a better-than-expected retail sales report and a rebound in risk sentiment in the broader market. Canadian retail sales for September rose by 0.6% m/m vs. expectations of 0.0% and a previous decline of 0.1%. Retail sales, excluding automakers, rose by 0.2% vs. a previous decline of 0.2%. The Canadian dollar is a commodity currency and is well positioned for further strength if OPEC+ countries agree this week on additional production cuts.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) was down by 0.39%, France’s CAC 40 (FR40) decreased by 0.37% on Monday, Spain’s IBEX 35 (ES35) fell by 0.03%, and the UK’s FTSE 100 (UK100) closed negative 0.37%.

Bank of England Governor Andrew Bailey suggested that an interest rate cut is unlikely in the foreseeable future and warned that the second half of the fight against inflation will be hard work. Officials, including chief economist Huw Pill, have emphasized the risk of continued domestic price pressures, as seen in indicators such as wage growth and service sector inflation. As recently as early last week, markets were leaning towards a rate cut next June as the economic outlook deteriorated. Now, they are not considering a rate cut from the current 5.25% until August 2024.

Crude oil prices settled at mixed levels on Monday. Disagreements among OPEC+ representatives over oil production levels have caused the group to postpone this Thursday’s meeting and are weighing on oil prices. Saudi Arabia, which has unilaterally cut oil production by 1.0 million bpd since July, is now asking other OPEC+ members to lower oil production levels, which has prompted a backlash from some African oil producers, including Angola and Nigeria. OPEC+ delegates have said they are moving toward a compromise but have yet to reach an agreement.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) was down by 0.53% for the day, China’s FTSE China A50 (CHA50) lost 1.57%, Hong Kong’s Hang Seng (HK50) fell by 0.20% on Monday, and Australia’s ASX 200 (AU200) was negative 0.76%.

Falling retail sales in Australia have raised hopes of weaker inflation, which may prompt the Reserve Bank to take a less hawkish stance. RBA Governor Michele Bullock said Australian inflation is largely replicating overseas trends and that the bank needs to be more cautious in raising rates to reduce price pressures.

Hong Kong’s exports rose last month for the first time in more than a year on improved trade with mainland China, lending some optimism to the financial hub’s economic outlook. Overseas shipments rose by 1.4% year-on-year to HK $379.9 billion ($48.8 billion) in October. This marked the first month of export growth since April 2022. Imports rose by 2.6% year-on-year to HK $405.6 billion. This was the first increase since June 2022. The trade deficit amounted to HK $25.8 billion. Hong Kong recently downgraded its economic growth forecast for this year, indicating that the financial center still faces tough times amid a faltering post-pandemic recovery. Gross domestic product is expected to grow by 3.2% in 2023, down from the previous forecast that saw the economy growing between 4% and 5%.

Main market quotes:

S&P 500 (US500) 4,550.42 −8.92 (−0.20%)

Dow Jones (US30) 35,333.40 −56.75 (−0.16%)

DAX (DE40) 15,966.37 −63.12 (−0.39%)

FTSE 100 (UK100) 7,460.70 −27.50 (−0.37%)

USD index 103.19 −0.21 (−0.20%)

• – Australia Retail Sales (m/m) at 02:30 (GMT+2);
• – Japan BoJ Core CPI (m/m) at 07:00 (GMT+2);
• – US CB Consumer Confidence (m/m) at 17:00 (GMT+2);
• – US FOMC Member Bowman Speaks at 17:45 (GMT+2);
• – Eurozone ECB President Lagarde Speaks (m/m) at 18:00 (GMT+2);
• – US FOMC Member Barr Speaks at 20:05 (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

At the close of the stock market on Friday, the Dow Jones Index (US30) increased by 0.33% (+1.22% for the week), while the S&P 500 Index (US500) added 0.06% (+1.10% for the week). The NASDAQ Technology Index (US100) closed Friday negative by 0.11% (+1.06% for the week).

Economic news from the US had a negative impact on the dollar on Friday after S&P reported that activity in the US manufacturing sector contracted more than expected in November, but activity in the service sector increased more than expected in November. The S&P US Manufacturing PMI for November fell by 0.6 to 49.4, weaker than expectations of 49.9. However, the Services PMI for November unexpectedly rose by 0.2 to a 4-month high of 50.8, which was better than expectations of a decline to 50.3. The dollar’s 0.52% decline provided indirect support for the stock. But Nvidia’s (NVDA) drop on Friday had a negative impact on the broad technology sector. The company told customers in China that it is delaying the launch of a new artificial intelligence chip until the first quarter of next year. Apple’s stock price also fell by nearly 1% after Counterpoint Research data showed that iPhone sales in China from October 30 to November 12 fell by 4% from a year ago.

Bank of America said EPFR Global data showed inflows into global equity funds totaled about $49 billion in the two weeks through November 21, the largest in 2 years. This suggests that hedge funds and investors continue to invest in the market with the expectation that the rally will continue into December.

Equity markets in Europe were mostly up on Friday. The German DAX (DE40) gained 0.22% (+0.72% for the week), the French CAC 40 (FR40) gained 0.20% (+0.70% for the week), the Spanish IBEX 35 (ES35) jumped by 0.42% (+1.91% for the week), the British FTSE 100 (UK100) closed positive by 0.06% (-0.21% for the week). European indices were supported by a rally in the Euro Stoxx 50 to a 3-month high after ECB President Lagarde said ECB policymakers may suspend the policy tightening campaign. ECB President Lagarde said on Friday that the central bank has already done enough, and the ECB is now at a stage where it can pause and assess the consequences of tightening its policy. ECB Governing Council spokesman Villeroy de Gallo also complemented Lagarde, saying, “Excluding surprises, I don’t think the ECB will raise interest rates again.”

British consumers have become more optimistic about the outlook for the economy and their personal finances this month, but their sentiment remains far from pre-crisis levels. GfK’s benchmark consumer confidence index rose to minus 24 in November from October’s three-month low of minus 30.

Gulf stock markets ended Sunday lower amid Friday’s drop in oil prices, although Saudi Arabia’s index was ahead of the trend. Oil, a catalyst for Gulf financial markets, fell on Friday as the release of some hostages in Gaza reduced geopolitical risk in the Middle East. OPEC+ countries moved closer to a compromise with African oil producers on production levels for 2024 after disagreements over those targets forced the oil-producing group to postpone a key meeting. The market also expects Saudi Arabia to extend an additional voluntary production cut of 1 million bpd that expires at the end of December.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) gained 0.84% for the week, China’s FTSE China A50 (CHA50) declined by 0.65% over 5 trading days, Hong Kong’s Hang Seng (HK50) ended the week down by 0.38%, and Australia’s ASX 200 (AU200) ended the week negative by 0.12%. On Monday, most Asian stocks fell on weak cues from China. Recent data showed that China’s largest economic engine remains under pressure, leading investors to become impatient for more stimulus measures from Beijing.

Friday’s consumer price news in Japan showed that price pressures remain above the Bank of Japan’s 2.0% target level, which could prompt the central bank to exit ultra-soft monetary policy sooner than expected. Activity in Japan’s manufacturing sector contracted this month at the sharpest pace in 9 months, dovish for BoJ policy. Japan’s index of leading indicators for September was revised upward by 0.2 to 108.9 from the previously announced reading of 108.7. Jibun Bank’s PMI for Japan’s manufacturing sector for November fell by 0.6 to 48.1, the sharpest contraction in 9 months.

S&P 500 (US500) 4,559.34 +2.72 (+0.06%)

Dow Jones (US30) 35,390.15 +117.12 (+0.33%)

DAX (DE40) 16,029.49 +34.76 (+0.22%)

FTSE 100 (UK100) 7,488.20 +4.62 (+0.06%)

USD index  103.42 −0.51 (−0.49%)

• – US Building Permits (m/m) at 15:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks (m/m) at 16:00 (GMT+2);
• – US New 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 

China will be a more attractive investment destination for global investors in 2024 despite the economic warning signs, predicts the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The bullish predictions from Nigel Green of deVere Group come as Beijing on Thursday confirmed additional financial support for China’s beleaguered property market and developers, including hard-hit Country Garden.

Shenzhen, China’s main industrial hub, has also unveiled new homebuying measures to further support the critical market.

It also comes as Reuters exclusively reports that government advisors are to recommend 2024 growth targets of 4.5-5.5%.

The deVere CEO says: “The marked slowdown of the world’s second-largest economy, home to 1.4 billion people, has been a huge international narrative for the last two years.

“China’s share of the global economy has dropped by 1.4% in this period – the largest drop since the 1960s.

“This matters for not only China but the rest of the world as it’s the largest trading partner of 140 countries and regions globally.”

Much of the focus has been on the downturn of the country’s property market, which makes up a considerable proportion of the economy, and the demographic and unemployment challenges that the economy faces.

But the economic red flags are beginning to flash less brightly say some experts and this will not go unnoticed by global investors.

“The property sector’s drag on China GDP has shrunk from 4% in 2022 to currently less than 2%,” says Nigel Green.

“In addition, Beijing’s further support of the market announced on Thursday shows it is committed to contributing to stability, boosting liquidity, preventing systemic risks, and avoiding contagion.

“Against this backdrop of the government’s increasingly proactive policies, such as stimulus measures and targeted reforms, it is likely that China will again become a more attractive destination for global investors.”

There are other ‘pull factors’ involved too which are expected to be zoomed in upon next year.

“Investors, including multinationals, have shunned the world’s second-largest economy in the last couple of years, but this could change again as the fundamentals come back into focus,” notes the deVere CEO.

“China is transitioning from an export economy to a consumption one that, ultimately, will be more sustainable. Indeed, the country’s burgeoning middle class could create the largest consumption market in the world in the next decade.

“As China moves up the value chain, it is directly acquiring more and more foreign brands, market networks and technologies that will further strengthen its position for global investors.”

He continues: “There’s still enormous potential for infrastructure growth, as its urbanization strategy is still in its infancy and the scope is massive.

“Plus, the reform of state-owned companies could blow apart monopolies and create major investment opportunities.”

The deVere Group chief executive also stresses that China is the world leader in sectors of “the fourth industrial revolution, including clean energy, electric vehicles and industrial robots.”

The Chinese government’s debt could also be noted as a positive. China’s debt to GDP ratio is about 110%, compared to the Japanese and US governments which are around 260% and 120%, respectively.

“China continues to face serious challenges, but the economic woes are starting to look less stark than they have over the last two years as Beijing appears to be becoming increasingly proactive on the essential property sector.

“This is likely to draw the attention of investors in 2024,” concludes Nigel Green.

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.