InvestMacro

By JustMarkets

At Monday’s stock market close, the Dow Jones Index (US30) was up by 0.16%, while the S&P 500 Index (US500) decreased by 0.08%. The Nasdaq Technology Index (US100) lost 0.22%. The broad market recovered from early losses on Monday after bond yields reversed to the downside, prompting coverage of short positions in equities. In addition, optimism that Tuesday’s US consumer price report for October would show an easing of price pressures gave stocks a boost.

On Friday, Moody’s Investors Service downgraded its outlook on the US credit rating from stable to negative, citing rising budget deficits and political polarization. The US lawmakers have until Friday evening this week to pass a temporary spending bill before funding runs out and the government shuts down.

Today, the US will release its CPI report. The Consumer Price Index is on the US Federal Reserve’s list of monitored indicators when regulating monetary policy. This report will measure the Fed’s progress in the fight to reduce inflation. Economists expect consumer inflation to show an increase of 0.1% on a monthly basis, while on an annualized basis, it is expected to decline from 3.7% to 3.3%. A sharper weakening in inflation could lead to renewed talk of a rate peak, fueled by the October jobs report, which pointed to weakening labor market conditions. But a cooling in demand is needed for Fed officials to have confidence that they are convincingly moving toward an inflation target. Demand is expressed in consumer spending, and that is usually retail sales and other related reports on how Americans spend money. Therefore, tomorrow’s retail sales data will give a better indication of the US Fed’s future trajectory.

Equity markets in Europe rallied solidly on Monday. Germany’s DAX (DE40) rose by 0.89%, France’s CAC 40 (FR40) gained 0.60% yesterday, Spain’s IBEX 35 (ES35) jumped by 0.96%, and the UK’s FTSE 100 (UK100) closed positive by 0.89%.

Inside the ECB, there is growing uncertainty over future plans. A representative of the ECB Governing Council, Kazaks, said yesterday that further ECB policy tightening seems to have become less necessary. His colleague, ECB Vice President Gindos, on the other hand, did not share this thought. Gindos said it was “premature” to discuss interest rate cuts because “we expect a temporary rebound in inflation in the coming months as the base effect of the sharp rise in energy and food prices in the fall of 2022 fades.”

Crude oil and gasoline prices rose moderately on Monday. A weaker dollar on Monday provided support for energy prices. In addition, expectations of increased fuel demand in the US during the Thanksgiving holiday are a favorable factor for crude oil prices.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) added 0.05% for the day, China’s FTSE China A50 (CHA50) decreased by 0.44%, Hong Kong’s Hang Seng (HK50) added 1.30% for the day, and Australia’s ASX 200 (AU200) was negative by 0.40% for Monday.

Japan’s Finance Minister Shunichi Suzuki said on Monday that policymakers will respond to sharp fluctuations in the yen as needed. The Bank of Japan is unhappy with the recent decline in the yen, which has fallen by 1.45% against the US dollar in the past week alone. According to analysts, if the yen breaks through the 152 mark, there is a high probability of currency intervention by the Japanese authorities.

Goldman Sachs Group Inc. expects inflation in Australia and New Zealand to fall to just below 3% by the end of 2024, which would be in line with both central banks’ targets and pave the way for lower interest rates. The cooling in prices will be driven by global commodity inflation, lower labor demand, and wage pressures. This would open the door for both central banks to begin easing monetary policy from late next year. Goldman’s view diverges sharply from forecasts by Australia’s central bank, which last week raised interest rates to a 12-year high of 4.35%, predicting CPI will exceed its 2-3% target until mid-2025. On Monday, acting Reserve Bank of Australia assistant governor Marion Kohler said the next phase of inflation’s return to target is likely to be more “protracted.”

S&P 500 (F)(US500) 4,411.55 −3.69 (−0.084%)

Dow Jones (US30) 34,337.87 +54.77 (+0.16%)

DAX (DE40)  15,345.00 +110.61 (+0.73%)

FTSE 100 (UK100) 7,425.83 +65.28 (+0.89%)

USD Index  105.68 −0.19 (−0.18%)

• – Australia NAB Business Confidence (m/m) at 02:30 (GMT+2);
• – Sweden Inflation Rate (m/m) at 09:00 (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);
• – Switzerland Producer Price Index (m/m) at 09:30 (GMT+2);
• – Switzerland Chairman Jordan Speaks at 09:45 (GMT+2);
• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – US Consumer Price Index (m/m) at 15:30 (GMT+2);
• – US FOMC Member Barr Speaks at 17:00 (GMT+2);
• – US FOMC Member Mester Speaks at 18:00 (GMT+2);
• – US FOMC Member Goolsbee Speaks at 19:45 (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

On Friday, gains in chip stocks and technology megamergers drove the overall market higher. As of Friday’s stock market close, the Dow Jones Index (US30) was up by 1.15% (+0.56% for the week), while the S&P 500 Index (US500) was up by 1.56% (+1.17% for the week). The NASDAQ Technology Index (US100) closed positive by 2.05% (+2.10% for the week). The S&P 500 (US500) and the Dow Jones Industrials (US300) reached 7-week highs and the NASDAQ (US100) tested a 2-month-high.

Friday’s Fed comments had a mixed impact on stocks. On the negative side, Atlanta Fed President Bostic spoke in favor of pausing Fed rate hikes, stating, “I think we will reach the 2% target level without having to do anything else.” On the other hand, San Francisco Fed President Daly said that if inflation continues to move sideways and the labor market and GDP growth remain steady or strong, it will probably be necessary to raise rates again. Currently, markets are betting on a 10% probability of a 25 bps rate hike at the next FOMC meeting on December 12-13 and a 24% probability of a 25 bps rate hike at the January 30-31, 2024 FOMC meeting.

In the US, the risk of a government shutdown is back on the table. If lawmakers in Washington fail to pass measures by Friday to at least temporarily fund the federal government’s operations, there is a threat of a shutdown. On Saturday, House Speaker Mike Johnson unveiled a Republican temporary funding measure aimed at averting a partial shutdown, but members of both parties quickly criticized the unorthodox plan. The new controversy could reignite concerns about the management of the world’s largest economy.

According to FactSet, the current earnings reporting season has been much better than analysts expected and is likely to show the first earnings-per-share growth in a year for companies in the S&P 500.

The University of Michigan’s US Consumer Sentiment Index for November fell by 3.4 to a 6-month low of 60.4, weaker than expectations of 63.7. The University of Michigan’s US Inflation Expectations Index for November unexpectedly rose to a 7-month high of 4.4% from 4.2% in October, versus expectations of a decline to 4.0%. In addition, 5-10-year inflation expectations rose to a 12-year high of 3.2%.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down by 0.77% (+0.10% for the week), France’s CAC 40 (FR40) fell by 0.96% (-0.30% for the week), Spain’s IBEX 35 (ES35) lost 0.36% (+0.81% for the week), and the UK’s FTSE 100 (UK100) closed negative by 1.28% (-0.77% for the week).

Friday’s comments from ECB President Lagarde indicate that she favors a pause in ECB rate hikes. Lagarde stated that keeping the deposit rate at the current level of 4% should be sufficient to contain inflation. There is a growing possibility that the ECB has peaked on rates, just like the US Fed.

UK GDP unexpectedly beat forecasts on most indicators. Over the last month, the economy grew by 0.2% (forecast 0.0%). However, the overall picture shows the economy is still depressed, with the 3-month average hitting annual lows and near negative territory.

Oil prices rose about 2% on Friday as Iraq voiced support for OPEC+ oil production cuts ahead of a meeting in two weeks on November 26. Amid weak economic data from China, the US, and the UK last week, concerns about the outlook for global demand offset worries about possible production disruptions related to the Middle East conflict. Analysts believe OPEC+ could continue to cut supplies if prices continue to fall.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) was up by 0.36% for the week, China’s FTSE China A50 (CHA50) was down by 0.04% over five trading days, Hong Kong’s Hang Seng (HK50) fell by 3.97% for the week, and Australia’s ASX 200 (AU200) was negative by 0.02% for the week.

Joe Biden and Xi Jinping are due to meet this week on the sidelines of the Asia-Pacific Economic Cooperation summit amid hopes for improved relations between the two largest economies.

S&P 500 (F)(US500) 4,347.35 +67.89 (+1.56%)

Dow Jones (US30) 34,283.10 +391.16 (+1.15%)

DAX (DE40)  15,234.39 −118.15 (−0.77%)

FTSE 100 (UK100) 7,360.55 −95.12 (−1.28%)

USD Index  105.80 −0.11 (−0.10%)

• – Japan Producer Price Index (m/m) at 01:50 (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 Tuesday’s stock market close, the Dow Jones Industrial Average (US30) decreased by 0.65%, while the S&P 500 Index (US500) lost 0.81%. The NASDAQ Technology Index (US100) closed negative by 0.94% on Thursday.

US Fed Chairman Powell spoke at the IMF’s annual academic conference yesterday. In a prepared speech, Powell said that he and his colleagues are pleased that inflation is slowing but that they are not sure if they have done enough to support it and would not hesitate to tighten it if necessary. As a result, stocks came under pressure, and bond yields rose. Comments from some Fed officials indicate that they favor keeping interest rates at current levels. Atlanta FRB President Bostic said yesterday that the Fed will maintain restrictive measures until it is confident that inflation will fall to 2%.

US weekly jobless claims unexpectedly fell by 3,000 to 217,000, matching expectations of 218,000.

Tesla (TSLA) shares fell more than 3% yesterday, topping the list of losers on the Nasdaq 100 (US100) after HSBC initiated coverage of the company’s stock with a “downgrade” recommendation and a price target of $146. Walt Disney (DIS) is up more than 6%, leading the Dow Jones Industrials (US30) higher after the company reported 150.2 million Disney+ subscribers in Q4, above the consensus forecast of 147.07 million subscribers.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.81%, France’s CAC 40 (FR40) gained 1.13%, Spain’s IBEX 35 (ES35) jumped by 1.31%, and the UK’s FTSE 100 (UK100) closed positive by 0.73%.

ECB Governing Council representative Villeroy de Gallo said that the inflation rate in the Eurozone has fallen three times over the year and, despite some volatility, the trend is clearly downward, so the ECB stops raising interest rates unless it has to face additional shocks. For his part, ECB Vice President Gindos said that talk of ECB interest rate cuts in the coming months is clearly premature, citing risks to the inflation outlook.

The likelihood that Saudi Arabia will extend its unilateral 1 million bpd production cut until the first quarter of 2024 is increasing by the day. Given renewed market concerns about Chinese demand and the broader macro outlook, oil prices are likely to recover in the coming trading sessions.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) jumped by 1.49% on Thursday, China’s FTSE China A50 (CHA50) added 0.05%, Hong Kong’s Hang Seng (HK50) was down by 0.33% on the day and Australia’s ASX 200 (AU200) was positive 0.28%.

In its quarterly Monetary Policy Statement, the Reserve Bank of Australia (RBA) said that at its November meeting this week, the Board discussed keeping rates unchanged but decided that an increase was necessary to ensure inflation slowed. Earlier this week, the RBA ended a four-month pause by raising the money rate by a quarter point to a 12-year high of 4.35%. Whether further monetary tightening will be needed to ensure that the inflation target is achieved within a reasonable timeframe will depend on the data and the evolving risk assessment. Economists believe the RBA has peaked and will not raise rates again.

S&P 500 (F)(US500) 4,347.35 −35.43 (−0.81%)

Dow Jones (US30) 33,891.94 −220.33 (−0.65%)

DAX (DE40)  15,352.54 +122.94 (+0.81%)

FTSE 100 (UK100) 7,455.67 +53.95 (+0.73%)

USD Index  105.91 +0.32 (+0.30%)

• – Australia RBA Monetary Policy Statement at 02:30 (GMT+2);
• – 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);
• – UK Trade Balance (m/m) at 09:00 (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 JustMarkets

As of Tuesday’s stock market close, the Dow Jones Index (US30) decreased by 0.12%, while the S&P 500 Index (US500) added 0.10%. The NASDAQ Technology Index (US100) closed positive by 0.08%. The broader market fluctuated on Wednesday amid mixed corporate news.

The US economic news on Wednesday was favorable for the dollar as wholesale sales for September rose by 2.2% m/m, which exceeded expectations of 0.9% and was the largest increase in 20 months. Meanwhile, the MBA weekly US Mortgage Applications rose by 2.5% week-over-week

On Thursday, markets are expecting Fed Chairman Powell’s comments during a conference call on monetary policy issues. On Wednesday, Powell did not comment on the economy or interest rates while delivering opening remarks at the Fed’s Research and Statistics Division Centennial Conference. Currently, markets are factoring in a 10% probability of a 25 bps rate hike at the next FOMC meeting on December 12-13 and an 18% probability of a 25 bps rate hike at the January 30-31, 2024 FOMC meeting.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) added 0.51%, France’s CAC 40 (FR40) gained 0.69%, Spain’s IBEX 35 (ES35) rose by 0.52%, and the UK’s FTSE 100 (UK100) closed negative by 0.11%.

The ECB’s monthly survey of consumer inflation expectations showed that 1-year Eurozone inflation expectations rose to a 5-month high of 4.0% in September from 3.5% in August, but 3-year inflation expectations were unchanged at 2.5%. Eurozone retail sales for September fell by 0.3% m/m, weaker than expectations of 0.2% m/m. ECB Governing Council representative Kazaks said yesterday that the ECB cannot rule out the possibility that further rate hikes may be needed.

Key messages from the Bank of England (BoE) Governor’s speech yesterday:

• It is really too early to talk about cutting rates;
• The main message is that we think policy should be restrictive for a long period of time, even though there are upside risks;
• We think policy is restrictive now, and economic growth is very weak.

Crude oil prices Wednesday extended Tuesday’s sharp losses as crude oil (WTI) fell to a 3-month low. Weakening oil demand contributed to the sell-off amid recent economic news indicating weakness in China’s economy. Additionally, crude oil has been pressured by hawkish central bank comments that have curbed speculation that central banks are done raising interest rates. Tuesday afternoon’s weekly API report was negative for crude oil as it showed that US crude inventories rose by 11.9 million barrels last week. There was no weekly EIA inventory report on Wednesday due to a system update.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.33% on Wednesday, China’s FTSE China A50 (CHA50) lost 0.28%, Hong Kong’s Hang Seng (HK50) was down by 0.58% for the day, and Australia’s ASX 200 (AU200) was positive by 0.26%.

In China, the latest data showed that both consumer and producer inflation fell in October, bringing the country into disinflation territory for the second time this year. The inflation data was released against a backdrop of disappointing trade data for October, with data released last week showing a steady decline in business activity in China during the month. The weak October data added to fears of a slowdown in China’s economic growth. However, more significant losses in Chinese equities were tempered by gains in real estate stocks, which rose amid reports that Beijing is considering additional measures to support the sector.

S&P 500 (F)(US500) 4,382.78 +4.40 (+0.10%)

Dow Jones (US30) 34,112.27 −40.33 (−0.12%)

DAX (DE40)  15,229.60 +76.96 (+0.51%)

FTSE 100 (UK100) 7,401.72 −8.32 (−0.11%)

USD Index  105.54 −0.01 (−0.01%)

• – China Consumer Price Index (m/m) at 03:30 (GMT+2);
• – China Producer Price Index (m/m) at 03:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 19:30 (GMT+2);
• – US Fed Chair Powell Speaks at 21:00 (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 Tuesday’s stock market close, the Dow Jones Index (US30) added 0.17%, while the S&P 500 Index (US500) increased by 0.28%. The NASDAQ Technology Index (US100) closed positive by 0.90% on Tuesday. The S&P 500 (US500 and NASDAQ (US100) indices hit 3-week highs yesterday, while the Dow Jones (US30) updated a one-month-high. But by the end of the trading day, the indices began to lose upward momentum amid hawkish FOMC comments.

The comments from Fed officials on Tuesday eased speculation that the Fed had stopped raising interest rates and proved bullish for the dollar. Minneapolis FRB President Kashkari said that while there has been encouraging inflation data for three months, it is not enough, and “we need to let the data continue to come to us to see if we have really put the inflation genie back in the bottle.” Chicago Fed President Goolsbee also said that the top priority for policymakers is to get inflation back to target, and the Fed does not want to commit to interest rate decisions in advance.

The latest economic data showed the US trade deficit for September widened to $61.5 billion from $58.7 billion in August, exceeding expectations of $59.8 billion.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) rose by 0.11%, France’s CAC 40 (FR40) fell by 0.39%, Spain’s IBEX 35 (ES35) lost 0.12%, and the UK’s FTSE 100 (UK100) closed negative by 0.10%.

German industrial production for September fell by 1.4% m/m, which was stronger than expectations of 0.1% m/m. The S&P German Construction PMI for October fell by 1.0 to 38.3, a record rate of contraction. The Eurozone’s Producer Price Index (displays the rate of inflation between factories) for September fell to 12.4% y/y, a record high since data collection began in 1982. All data is negative for the European currency.

Rapid wage growth in the Eurozone could keep inflation high for longer, and the European Central Bank should keep interest rates at or near record highs until next year to extinguish price pressures, the International Monetary Fund said on Wednesday.

Bank of England Chief Economist Pill hinted that an interest rate cut could come by the middle of next year. Markets now expect a 0.75% rate cut next year.

The strengthening of the US dollar on Tuesday had a negative impact on energy prices. In addition, weakening demand for oil led to a sell-off in the commodity after Chinese export shipments fell more than expected in October. As a result, crude oil (WTI) fell to a 3-month low, and gasoline fell to a 4-week low. However, investors should not forget that OPEC+ countries have extended production cuts until the end of the year and are likely to extend these quotas for the next year, so traders should not expect a strong drop in oil prices.

Asian markets were mostly declining yesterday. Japan’s Nikkei 225 (JP225) was down by 1.34% on Tuesday, China’s FTSE China A50 (CHA50) lost 0.66%, Hong Kong’s Hang Seng (HK50) decreased by 1.65% for the day, and Australia’s ASX 200 (AU200) was negative by 0.29% for Tuesday.

Chinese regulators held a symposium with several major property developers, including China Vanke Co Ltd, Poly Real Estate Group Co Ltd, and Longfor Properties Co Ltd, to assess their financial situation amid a prolonged slump in the real estate market. The news boosted hopes that the government would provide additional support for the weakened real estate sector, which has faced a series of high-profile defaults in recent years. However, sentiment towards China is still intact after weak trade balance data for October. The focus will now turn to China’s inflation data for the month, due for release on Thursday.

Bank of Japan Governor Kazuo Ueda said Wednesday that the central bank doesn’t necessarily have to wait for inflation-adjusted wage growth to turn positive before ending loose monetary policy. Ueda said the passive effect of rising import prices should fade, and wages and inflation need to rise in tandem for the BOJ to consider an exit from ultra-loose policy. Analysts expect Japan’s inflation-adjusted real wages, which fell for the 18th consecutive month in September, to continue falling next year as wage growth fails to catch up with persistent price increases.

S&P 500 (F)(US500) 4,378.38 +12.40 (+0.28%)

Dow Jones (US30) 34,152.60 +56.74 (+0.17%)

DAX (DE40)  15,152.64 +16.67  (+0.11%)

FTSE 100 (UK100) 7,410.04 −7.72 (−0.10%)

USD Index  105.51 +0.29 (+0.28%)

• – New Zealand Inflation Expectations (q/q) at 04:00 (GMT+2);
• – German Consumer Price Index (m/m) at 09:00 (GMT+2);
• – UK BoE Gov Bailey Speaks (m/m) at 11:30 (GMT+2);
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+2);
• – Canada Building Permits (m/m) at 15:30 (GMT+2);
• – US Fed Chair Powell Speaks at 16:15 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
• – US FOMC Member Barr Speaks at 21:00 (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 Monday’s stock market close, the Dow Jones Index (US30) added 0.10%, while the S&P 500 Index (US500) increased by 0.18%. The NASDAQ Technology Index (US100) closed positive by 0.30% on Monday. Stocks rose on Monday on the back of positive developments from last Friday, when a weaker-than-expected October US jobs report and October ISM services report showed a slowing economy that could keep the Federal Reserve from raising interest rates and even start lowering them by the middle of next year.

On Monday, optimistic comments from Fed Vice Chair Brainard were favorable for stocks when she said the economy is performing exceptionally well and is near the point of sustained growth, with most forecasters dismissing the issue of recession. Currently, markets are pricing in a 10% probability of a 25 bps rate hike at the next FOMC meeting on December 12-13 and an 18% probability of a 25 bps rate hike at the January 30-31, 2024 FOMC meeting.

Booking Holdings (BKNG) shares closed higher by more than 4% after D.A. Davidson upgraded the stock from Neutral to Buy with a price target of $2,400. Airbnb (ABNB) shares were down more than 3% yesterday after Italy’s financial police confiscated €779 million ($835 million) from the company due to failure to pay a portion of taxes.

Growth in Canadian economic activity accelerated slightly in October, while a measure of prices fell to its lowest level in six months. The seasonally adjusted index rose to 53.4 from 53.1 in September. It was the third consecutive month the index exceeded the 50 threshold, indicating the sector is expanding.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) decreased by 0.35%, France’s CAC 40 (FR40) fell by 0.48% yesterday, Spain’s IBEX 35 (ES35) lost 0.56% and the UK’s FTSE 100 (UK100) closed around its opening price.

According to a survey released on Tuesday, the pace of growth in UK consumer spending last month was the slowest in more than a year, reflecting concerns about the cost of living in the run-up to Christmas. The Bank of England raised interest rates for 14 consecutive meetings until August this year. Last week, it said it planned to keep them at a 15-year high to keep inflation down, although it said the economy was stagnant and so far, the effect of the rate hikes had only been half felt.

Crude oil and gasoline prices closed moderately higher on Monday after Saudi Arabia and Russia confirmed they would maintain crude production cuts through the end of the year. The 23-nation OPEC+ coalition will meet again on November 26 to review oil production policy for 2024.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) jumped by 2.37% on Monday, China’s FTSE China A50 (CHA50) added 0.75%, Hong Kong’s Hang Seng (HK50) was up by 1.71% on the day, and Australia’s ASX 200 (AU200) was positive by 0.28% on Monday.

The Reserve Bank of Australia (RBA) expectedly to raise the interest rate by 0.25%. But the Australian dollar fell more than 0.8% as the rate hike was accompanied by softening language on the need for further increases. The RBA said in a statement that the recent rise in inflation is not material to an increase in the inflation outlook, with the impact of past rate hikes not yet fully reflected in the real economy, so there are reasons not to raise rates further.

Japanese household spending fell by 2.8% year-on-year in September, marking the seventh consecutive monthly decline, as households cut spending on food and other goods amid rising prices with real wages continuing to fall.

Chinese exports contracted more than expected in October amid deteriorating overseas demand, while an unexpected rise in imports caused China’s trade surplus to shrink to its lowest level in 17 months. The trade data showed continued headwinds for the Chinese economy, especially amid deteriorating economic conditions in China’s largest trading countries − Europe and the United States.

S&P 500 (F)(US500) 4,365.98 +7.64 (+0.18%)

Dow Jones (US30) 34,095.86 +34.54 (+0.10%)

DAX (DE40)  15,135.97 −53.28 (−0.35%)

FTSE 100 (UK100) 7,417.76 +0.03 (+0.01%)

USD Index  105.29 +0.27 (+0.26%)

• – China Trade Balance (m/m) at 05:00 (GMT+2);
• – Australia RBA Interest Rate Decision at 05:30 (GMT+2);
• – Australia RBA Rate Statement at 05:30 (GMT+2);
• – Switzerland Unemployment Rate (m/m) at 08:45 (GMT+2);
• – German Industrial Production (m/m) at 09:00 (GMT+2);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+2);
• – US Trade Balance (m/m) at 15:30 (GMT+2);
• – Canada Trade Balance (m/m) at 15:30 (GMT+2);
• – US FOMC Member Williams Speaks at 19:00 (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) added 0.66% (+4.68% for the week), while the S&P 500 Index (US500) was up by 0.94% (+5.29% for the week). The NASDAQ Technology Index (US100) closed positive by 1.38% (+5.71% for the week) on Friday. All three indices closed in positive territory and hit their monthly highs. A weak US unemployment report supported speculation after Wednesday’s FOMC meeting that the Fed’s rate hiking regime is over.

The US unemployment report released on Friday showed weaker-than-expected labor market dynamics. The US employment number for October rose by 150,000, which was weaker than expectations of 180,000. In addition, the September data was revised downward to 297,000 from 336,000. October’s US unemployment rate rose by 0.1 points to a nearly 2-year high of 3.9%, indicating a slight weakening of the labor market versus expectations of an unchanged 3.8%. A positive for inflation was the 0.2% m/m increase in average hourly earnings in October, which was slightly weaker than expectations of 0.3%.

Friday’s ISM Services Business Activity Index for October fell by 1.8 points to 51.8, which was weaker than expectations of a decline to 53.0. At the same time, the final October S&P US services PMI was revised downward. The PMI reports indicate some slowdown in the US services sector.

Equity markets in Europe traded without any unified dynamics on Friday. The German DAX (DE40) rose by 0.30% (+2.83% for the week), the French CAC 40 (FR40) fell by 0.19% (+3.23% for the week) on Friday, the Spanish IBEX 35 (ES35) rose by 0.36% (+3.78% for the week), the British FTSE 100 (UK100) closed negative by 0.39% (+1.73% for the week).

The Eurozone unemployment rate for September rose by 0.1 points to 6.5%, indicating a slightly weaker labor market compared to expectations of an unchanged unemployment rate of 6.4%. Germany’s trade report showed weakness in the economy, with exports for September down by 2.4% m/m and imports down by 1.7% m/m, weaker than expectations of 2.0% and 0.1%, respectively.

Tensions continue to rise not only in the Middle East but globally as the conflict between Israel and the Gaza Strip continues to intensify. As each side continues to call on their potential allies, the likelihood of a larger conflict could increase. If this happens, we could begin to see sell-offs in stock markets and rising oil and gold prices.

Asian markets were predominantly up last week. Japan’s Nikkei 225 (JP225) gained 4.02% for the week, China’s FTSE China A50 (CHA50) added 1.35% over five trading days, Hong Kong’s Hang Seng (HK50) ended the week up by 2.55%, and Australia’s ASX 200 (AU200) ended the week positive by 3.12%. Most Asian indices rose sharply on Monday as weaker-than-expected US jobs data reinforced expectations that the Federal Reserve has ended its rate hike cycle, while attention also shifted to upcoming economic data from China.

The Reserve Bank of Australia is preparing to raise interest rates at its meeting on Tuesday, following signs of renewed inflation and some hawkish comments from central bank officials. The RBA is expected to raise its target money rate by 25 basis points to 4.35% as stronger-than-expected third-quarter inflation data released in October prompted a number of analysts to adjust their expectations. Australian banks ANZ and Westpac pushed back their November rate hike forecasts from December, while UBS and ING also expect a rate hike at the RBA’s November 7 meeting.

Bank of Japan Governor Ueda said on Monday that the central bank needs to have more confidence that wages will continue to rise (rising wages lead to higher prices for services, which will fuel inflation), and as the economy remains strong, it is premature to think about an exit from accommodative policy.

S&P 500 (F)(US500) 4,358.34 +40.56 (+0.94%)

Dow Jones (US30) 34,061.32 +222.24 (+0.66%)

DAX (DE40)  15,189.25 +45.65 (+0.30%)

FTSE 100 (UK100) 7,417.73 −28.80 (−0.39%)

USD Index  105.07 +0.05 (+0.05%)

• – Japan Monetary Policy Meeting Minutes at 01:50 (GMT+2);
• – Japan Services PMI (m/m) at 02:30 (GMT+2);
• – Japan BOJ Gov Ueda Speaks at 06:10 (GMT+2);
• – German Services PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – UK Construction PMI (m/m) at 11:30 (GMT+2);
• – Canada Ivey PMI (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 

*Note: This report was written before the US NFP data was published*

• Euro could see volatility next week thanks to EU data dump ​​​​​​

• Powell remarks could trigger move in USD

• EURUSD bear flag waits for fresh spark on D1 charts

• Key levels of interest found at 1.0690, 1.0530 and 1.0450

Caution remains the name of the game as the key US jobs report this afternoon (Friday, 3rd November) approaches.

Even with the growing anticipation, some keen investors may be keeping tab on what’s to come in the week ahead:

Monday, 6th November

• EUR: Eurozone S&P Global Services PMI, Germany factory orders
• JPY: BoJ September meeting minutes
• GBP: BoE chief economic Huw Pill speech

Tuesday, 7th November 

• CNH: China trade, forex reserves
• AUD: RBA rate decision
• EUR: Eurozone PPI, Germany industrial production
• JPY: Japan household spending
• USD: US trade, Kansas City Fed President Jeff Schmid speech

Wednesday, 8th November

• EUR: Eurozone retail sales, Germany CPI
• GBP: BOE Governor Andrew Bailey speech
• USD: US wholesale inventories, New York Fed President John Williams speech
• WSt30_m: Walt Disney earnings

Thursday, 9th November  

• CNH: China CPI, PPI, money supply, new yuan loans
• GBP: BOE chief economist Huw Pill speaks
• USD: US initial jobless claims, Atlanta Fed President Raphael Bostic, Richmond Fed President Tom Barkin, Fed Chair Jerome Powell speech

Friday, 10th November

• JPY: Japan M2 money stock
• NZD: New Zealand PMI
• EUR: ECB President Christine Lagarde speech
• GBP: UK industrial production, GDP
• USD: University of Michigan consumer sentiment, Fed speak

Our focus falls on none other than the world’s most traded currency, which is set to be influenced by numerous reports from Europe and the United States, along with speeches from Fed officials including Jerome Powell.

Before we discuss what to expect from the EURUSD next week, it is worth noting that the currency pair is under pressure with a bearish flag pattern in play on the daily charts.

A bearish flag is a candlestick chart pattern that signals the continuation of a downtrend once the technical bounce is finished.

A fresh fundamental spark could be required to trigger a significant technical move on the EURUSD. Here are 3 potential catalysts to keep an eye on in the week ahead:

1. EU data dump

The euro could see heightened volatility due to top-tier data from Europe in the first half of the week.

Concerns remain elevated over Europe’s outlook with economic growth contracting 0.1% in the third quarter of 2023. However, inflation has fallen to its lowest level in more than two years – strengthening the case for ECB doves and boosting expectations that the ECB will not raise rates further.

Investors will be paying close attention to some key data pieces ranging from Eurozone PMI’s, PPI and retail sales along German factory orders and industrial production among other significant releases from the region.

• The EURUSD could find itself under fresh selling pressure if overall economic data disappoints and boosts speculation around rate cuts in the first half of 2024.
• Euro bulls may draw support from strong economic data, especially if this supports expectations around rates remaining higher for longer

As of writing, traders are currently pricing in an 82% probability of a 25-basis point ECB cut by April 2024.

2. Powell remarks + US data

The Fed not only left interest rates unchanged at its November meeting but Powell also hinted that the central bank could be done with its most aggressive tightening cycle in 40 years.

Powell expressed optimism over the US economy but still warned that there was a long way to go on the inflation fight. Speeches from various Fed officials will be in sharp focus but on Thursday the spotlight shine on Powell as he participates in a panel on monetary policy challenges at the IMF’s annual research conference in Washington. It will be wise to keep an eye on US economic data which could influence monetary policy expectations.

• Should Fed officials strike a dovish tone and overall US data disappoint, this could strengthen the argument around the Fed being done with hikes – supporting the EURUSD as a result amid dollar weakness.
• If Powell along with Fed officials sounds more hawkish and US data beats forecasts, expectations could rise around one more Fed hike before the end of 2023, pulling the EURUSD lower as the dollar strengthens.

As of writing, traders are pricing in a 32% probability of a 25 basis point Fed hike by the end of 2023.

3. Technical forces: bear flag

A bear flag technical pattern could be in play on the daily charts with prices flirting around the 50-day SMA as of writing. Prices are trading below the 100 and 200-day SMA while the MACD trades below zero. Key resistance can be found at 1.0730 and 1.0690. Support may be identified at 1.0530 and 1.0450.

• Sustained weakness below 1.0730 may encourage prices to slip back towards 1.0530 before targeting the 1.0450 level.
• Should prices break above 1.0730, this may trigger a move towards the 200-day SMA around 1.0800.

According to Bloomberg’s FX model, there is a 74% chance that the EURUSD will trade between 1.0539 and 1.0768 range over the coming week.

Article by ForexTime

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

By JustMarkets

As of Thursday’s stock market close, the Dow Jones Index (US30) increased by 1.70%, while the S&P 500 Index (US500) added 1.89%. The NASDAQ Technology Index (US100) closed positive at 1.78% yesterday. All three indices hit two-week highs. Hopes that the Federal Reserve will not raise interest rates again drove bond yields lower and supported stocks.

Thursday’s economic news out of the US was primarily dovish for Fed policy and bearish for the dollar. Weekly Initial Jobless Claims rose by 5,000 to 217,000, indicating a slightly weaker labor market than expectations of no change at 210,000. Nonfarm labor productivity rose by 4.7% in the third quarter, exceeding expectations of 4.3% and the highest in 3 years.

Apple (AAPL) posted its fourth consecutive loss on revenue of $89.5 billion, down 1% from the previous quarter. The company’s stock fell more than 3.5% on the report. Starbucks (SBUX) closed higher by more than 9% after reporting Q4 comparable sales growth of 8.0%, beating the consensus forecast of 6.31%. Qualcomm (QCOM) closed higher by more than 5% after reporting adjusted Q4 revenue of $8.67 billion. Moderna (MRNA) declined more than 6% and topped the Nasdaq 100 losers list after reporting a third-quarter loss per share of $9.53 after including $3.1 billion in redundancy costs and tax benefits. Airbnb (ABNB) closed down more than 3% after reporting Q4 revenue guidance of $2.13 billion to $2.17 billion, which was worse than expected.

Equity markets in Europe were mainly up yesterday. The German DAX (DE40) rose by 1.48%, the French CAC 40 (FR40) gained 1.85% yesterday, the Spanish IBEX 35 (ES35) added 2.04%, and the British FTSE 100 (UK100) closed positive at 1.42%.

The number of unemployed in Germany for October rose by 30,000, exceeding expectations of 14,000, indicating a weakening labor market. The unemployment rate rose by 0.1% to 5.8% in October, matching expectations and the highest rate in 2 years. Comments from ECB Governing Council spokesman Knott indicate that he favors a pause in ECB rate hikes.

On Thursday, the Bank of England (BOE) voted 6-3 to keep its key interest rate at 5.25%. It said the restrictive policy will likely be needed for an extended period to contain inflation. Bank of England Governor Bailey said policymakers are watching to see if further rate hikes will be required and that it is very early to think about cutting rates.

Swiss inflation remained at 1.7% y/y in October, matching the market consensus. The core rate rose to 1.5% y/y from 1.3%. The Swiss National Bank (SNB) has ensured that inflation is within the 0%-2% target range. One of the reasons the SNB has been able to keep inflation below target is the strong Swiss franc, which has kept inflation from rising. However, the SNB has expressed concern that inflation could exceed the 2% ceiling as electricity, rent, and public transportation costs have increased.

The EIA natural gas inventories report released Thursday showed an increase of 79 Bcf, which was in line with the consensus forecast but above the 5-year average of 57 Bcf. As of October 27, natural gas inventories were up 7.9% y/y and 5.7% above the 5-year seasonal average, indicating ample natural gas reserves ahead of the winter months.

In the Middle East, Israeli soldiers entered Gaza City, completing the encirclement of the urban area that is home to the main forces of the Palestinian militant group Hamas, but now face a host of challenges in fighting in the dense urban environment.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) gained 1.10% yesterday, China’s FTSE China A50 (CHA50) fell by 0.20%, Hong Kong’s Hang Seng (HK50) added 0.75% on the day, and Australia’s ASX 200 (AU200) ended Thursday positive at 0.90%.

Major Australian banks, including ANZ, ING, and Macquarie, raised home loan interest rates in anticipation of the Reserve Bank of Australia (RBA) raising the cash rate by 25 basis points at its next meeting.

S&P 500 (F)(US500) 4,317.78 +79.92 (+1.89%)

Dow Jones (US30) 33,839.08 +564.50 (+1.70%)

DAX (DE40)  15,143.60 +220.33 (+1.48%)

FTSE 100 (UK100) 7,446.53 +104.10 (+1.42%)

USD Index  106.14 −0.75 (−0.70%)

• – German Trade Balance (m/m) at 09:00 (GMT+2);
• – UK Services PMI (m/m) at 11:30 (GMT+2);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+2);
• – US Nonfarm Payrolls (m/m) at 14:30 (GMT+2);
• – US Unemployment Rate (m/m) at 14:30 (GMT+2);
• – Canada Unemployment Rate (m/m) at 14:30 (GMT+2);
• – US ISM Services PMI (m/m) at 16:00 (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.