InvestMacro

By JustMarkets

At the close of the stock market yesterday, the Dow Jones Index (US30) decreased by 0.42%, while the S&P 500 Index (US500) was down by 0.15% on Tuesday. The NASDAQ Technology Index (US100) closed positive by 0.09%.

Lower expectations for a Fed interest rate cut in March weighed on equities as swap markets show that the probability of a 25 bps Fed rate cut at the March 19-20 FOMC meeting fell to 67% from the 100% probability last month.

The US trade deficit unexpectedly narrowed to negative $63.2 billion in November from $64.5 billion in October, which was better than expectations of an increase to negative $64.9 billion and a positive for Q4 GDP. The reduction of the deficit is a positive factor for the strengthening of the national currency.

In November 2023, Canada recorded a trade surplus of CAD 1.6 billion, down significantly from a surplus of CAD 3.2 billion in the previous month and below market expectations of CAD 2 billion. The surplus was driven by a 1.9% increase in imports to CAD 64.2 billion.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) was down by 0.17%, France’s CAC 40 (FR 40) fell by 0.32% on Tuesday, Spain’s IBEX 35 (ES35) lost 1.46%, and the UK’s FTSE 100 (UK100) closed negative by 0.13%.

The Eurozone unemployment rate for November unexpectedly fell to a record low of 6.4%, indicating a stronger labor market. German industrial production for November unexpectedly declined by 0.7% m/m, weaker than expectations of 0.3% m/m. Industrial production declined for the sixth consecutive month. ECB Governing Council representative Centeno said yesterday that good news on Eurozone inflation allows the ECB to cut interest rates sooner than expected.

According to the World Bank, the global economy is experiencing its worst growth rate in 30 years. Global economic growth is projected to slow for the third consecutive year in 2024, falling to 2.4% from 2.6% in 2023, according to the latest World Economic Outlook report released on Tuesday. It also points out that escalating conflicts (Russian invasion of Ukraine, conflict in the Middle East) could have significant implications for energy prices, which could affect both inflation and economic growth.

Asian markets traded yesterday without any unified dynamics. Japan’s Nikkei 225 (JP225) was up by 1.16% for the day, China’s FTSE China A50 (CHA50) was down by 0.46%, Hong Kong’s Hang Seng (HK50) decreased by 0.21%, and Australia’s ASX 200 (AU200) was positive by 0.93%. Japan’s Nikkei 225 (JP225) jumped to a 34-year high on Wednesday amid growing expectations of a delay in the Bank of Japan’s policy tightening plans.

Japanese household spending fell by 2.9% y/y in November, weaker than expectations of 2.3% y/y and marking the ninth consecutive month of spending declines. Tokyo’s Consumer Price Index for the decade fell to 2.4% y/y from 2.7% y/y in November, better than expectations of 2.5% y/y and the slowest rate of increase in 1.5 years, dovish for BOJ policy.

In Australia, the monthly consumer price index (CPI) came in at 4.3% y/y in November, the slowest pace since January 2022. This is down from October’s 4.9% reading and below market forecasts of 4.4%. If the fourth quarter inflation report due out at the end of January paints a similar picture for consumer prices, markets may move expectations for the first-rate cut by the Reserve Bank of Australia (RBA) in June since August this year.

S&P 500 (US500) 4,756.50 −7.04 (−0.15%)

Dow Jones (US30) 37,525.16 −157.85 (−0.42%)

DAX (DE40)  16,688.36 −28.11 (−0.17%)

FTSE 100 (UK100) 7,683.96 −10.23 (−0.13%)

USD Index  102.53 +0.32 (+0.31%)

• – Australia Consumer Price Index (m/m) at 02:30 (GMT+2);
• – UK BoE Gov Bailey Speaks at 16:15 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2);
• – US FOMC Member Williams Speaks (m/m) at 22:15 (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 stock market close yesterday, the Dow Jones Index (US30) was up by 0.58%, while the S&P 500 Index (US500) added 1.41% on Monday. The NASDAQ Technology Index (US100) closed positive by 2.20% yesterday. Nvidia stock’s (NVDA) rise to a record high led to gains in technology stocks, which also had a positive impact on the overall market. On Monday, stocks also received support from lower bond yields amid comments from Federal Reserve President of Dallas, Logan, who said that the Fed may slow the pace of its asset portfolio reductions to maintain sufficient liquidity in financial markets.

Atlanta Fed President Bostic said yesterday he is comfortable with the US Fed’s restrictive stance. Bostic wants to see the economy continue to grow and inflation reach our 2% level. He added that he expects the Fed’s first-rate cut in the third quarter of this year.

Nvidia (NVDA) closed at a record high (+6%) after it unveiled new graphics chips at CES with additional components that will allow users to better utilize artificial intelligence on their personal machines without having to rely on remote services available over the internet. Quotes of Advanced Micro Devices (AMD) are up more than 5% after Melius Research LLC upgraded the stock to “buy” from “hold” with a $188 price target. Boeing (BA) stock price fell more than 8%, topping the S&P 500 and Dow Jones Industrials losers list, after the company took its 737 Max 9 jet out of service for inspections after a section of the fuselage of a new Alaska Airlines plane burst during flight. United Airlines said Monday that during inspections, it found loose bolts and other parts on the 737 Max 9’s plug doors.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.74%, France’s CAC 40 (FR40) gained 0.40% on Monday, Spain’s IBEX 35 (ES35) jumped by 0.44%, and the UK’s FTSE 100 (UK100) closed positive by 0.06%.

ECB Governing Council spokesman Vujcic said yesterday that he expects inflation to slow gradually and that the ECB is not talking about cutting interest rates now and probably won’t do so until the summer.

Eurozone Dec economic confidence indicator rose by 2.4 to an 8-month high of 96.4, exceeding expectations of 94.2. German trade news was better than expected: November exports rose by 3.7% m/m, stronger than expectations of 0.5% m/m and the biggest increase in 2 years. In addition, November imports rose by 1.9% m/m, stronger than expectations of 0.4% m/m and the largest increase in 9 months.

Silver prices came under pressure yesterday after German factory orders rose less than expected, indicating weak demand for industrial metals. Silver is highly correlated to gold, and gold is now under pressure as the US Federal Reserve and ECB do not seem to be planning to cut rates this spring as economists expect.

Crude oil and gasoline prices fell sharply on Monday, with gasoline prices falling to their lowest in 3 weeks. Concerns about worsening global oil demand drove crude prices lower after Saudi Arabia cut the official selling prices of its crude to all buyers. Oil prices also fell on a ShippingWatch report that some shipping companies have struck a deal with Houthi rebels to allow their ships to pass safely through the Red Sea, which could reduce supply disruptions.

Asian markets were mostly down on Monday. Japan’s Nikkei 225 (JP225) gained 0.27% for the day, China’s FTSE China A50 (CHA50) fell by 1.14%, Hong Kong’s Hang Seng (HK50) ended the day down by 1.88%, and Australia’s ASX 200 (AU200) ended the trading day negative by 0.50%.

Chinese authorities said they plan to reduce the amount of money banks must set aside in reserves to stimulate lending. The Central Bank will also strengthen counter-cyclical and inter-cyclical policy adjustments to create a favorable financial environment for the country’s economic growth. Traders are raising bets on further monetary easing this year as a weak economic recovery forces authorities to cut interest rates and provide ample liquidity.

The Bank of Japan (BoJ) said it will cut its monthly purchases of ultra-long government bonds, a reminder that it may still go for a reduction in stimulus to the economy this year. Market bets indicate traders still expect the Bank of Japan to end its negative interest rate policy later this year, although speculation that it will do so this month has largely subsided. Data released on Tuesday showed that consumer price growth in Tokyo slowed for a second month in December, which also eased pressure on the BOJ. Currently, overnight index swaps indicate that the Central Bank will end its negative rate policy in July this year, although as recently as two weeks ago, it was supposed to happen in April.

S&P 500 (US500) 4,763.54 +66.30 (+1.41%)

Dow Jones (US30) 37,683.01 +216.90 (+0.58%)

DAX (DE40)  16,716.47 +122.26 (+0.74%)

FTSE 100 (UK100) 7,694.19 +4.58 (+0.060%)

USD Index  102.24 −0.17 (−0.16%)

• – Japan Tokyo Core CPI (m/m) at 01:30 (GMT+2);
• – Australia Retail Sales (m/m) at 02:30 (GMT+2);
• – Switzerland Unemployment Rate (m/m) at 08:45 (GMT+2);
• – German Industrial Production (m/m) at 09:00 (GMT+2);
• – Eurozone Unemployment Rate (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).

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 0.07% (-0.67% for the week), while the S&P 500 Index (US500) was up by 0.18% (-1.86% for the week). The NASDAQ Technology Index (US100) closed positive by 0.09% (-3.83% for the week).

The dollar rose to a 3-week high on Friday morning after a stronger-than-expected US December payrolls report dampened expectations that the Federal Reserve will soon cut interest rates. However, the dollar gave up mid-day and moved to the downside after the ISM Services Business Activity Index for December in the US came in weaker than expected. US nonfarm payrolls for the decade rose by 216,000, exceeding expectations of 175,000. The unemployment rate for December was unchanged at 3.7%, which was stronger than expectations for an increase to 3.8%. The US average hourly earnings for the decade rose by 0.4% m/m and 4.1% y/y, stronger than expectations of 0.3% m/m and 3.9% y/y. The US ISM Services Business Activity Index for the decade fell by 2.1 to a 7-month low of 50.6, weaker than expectations of 52.5. Also boosting stocks were dovish comments from FRB President Richmond Barkin on Friday, when he said he was not opposed to lowering interest rates as the economy normalizes and confidence grows that inflation will fall.

Statistics Canada showed Friday that labor productivity — a broad measure of real gross domestic product per number of hours worked in the economy — has declined in the country for six consecutive quarters. Economists say the measure is critical to improving Canada’s quality of life, and the decline will be of particular concern to the Bank of Canada (BoC), which will determine what benchmark interest rate to set next. While productivity has stalled, Friday’s jobs report shows average hourly earnings accelerated to 5.4% year-over-year in December. Bank policy makers note that average hourly earnings growth in the 4% to 5% range falls short of the 2% inflation target.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) fell by 0.14% (-0.09% for the week), France’s CAC 40 (FR40) lost 0.40% (-1.89% for the week) on Friday, Spain’s IBEX 35 (ES35) fell by 0.18% (+0.46% for the week) on Friday, and the UK’s FTSE 100 (UK100) closed negative by 0.43% (-0.43% for the week). The Euro Stoxx 50 Index (EU50) fell to a one-month low on Friday, and European government bond yields rose to 3-week highs after the Eurozone’s December consumer price index accelerated from November, reducing the ECB’s chances of easing monetary policy.

Goldman Sachs Group Inc. and Bloomberg Economics raised their growth forecasts for the United Kingdom, giving hope to the economy as the economic outlook improves even as floods and strikes shake the country. In the markets, analysts have raised their forecasts for sterling, with investors recently turning bullish on the currency for the first time in three months. Some are also seeing signs of a reversal in equities on the back of stronger retail sales figures.

German retail sales for November fell by 2.5% m/m, weaker than expectations of 0.5% m/m and the biggest decline in 19 months. Germany is the economic engine of Europe, so if the German economy is struggling, it is likely that the rest of the EU is too. However, German manufacturing PMI data — although still in deep negative territory — showed signs of improvement, rebounding from a low of 38.8. The ZEW economic sentiment index, which measures experts’ views on the direction of the European economy over the next six months, also rose from its pessimistic low of September 2023.

As transportation corporations divert ships away from the Red Sea, retailers face the biggest upheaval in shipping since COVID-19 threatened the freight industry in 2020. As a result, Western retailers may wait longer for goods to arrive from China, and shortages will drive up prices. The British Retail Consortium said the rising costs could reverse the trend of lower food price inflation. It could also affect energy supplies to Europe.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell by 0.93%, China’s FTSE China A50 (CHA50) lost 2.73% over five trading days, Hong Kong’s Hang Seng (HK50) ended the week down by 3.11%, and Australia’s ASX 200 (AU200) ended the week negative by 1.32%.

On Friday, the People’s Bank of China (PBoC) said it will strive to maintain buoyant financial activity and expand financial openness this year to support economic growth and high-quality development effectively. The PBoC will deepen financial market opening by facilitating foreign investors’ participation in China’s bond market, the statement added. In addition, efforts will be made to strengthen the interconnectivity of domestic and overseas financial infrastructure, participate in the formulation of rules for international trade involving the financial sector, and further improve the policy system to facilitate the cross-border use of the yuan.

S&P 500 (US500) 4,697.24 +8.56 (+0.18%)

Dow Jones (US30) 37,466.11 +25.77 (+0.07%)

DAX (DE40)  16,594.21 −23.08 (−0.14%%)

FTSE 100 (UK100) 7,689.61 −33.46 (−0.43%)

USD Index  102.44 +0.01 (+0.01%)

• – German Trade Balance (m/m) at 09:00 (GMT+2);
• – Switzerland Retail Sales (m/m) at 09:30 (GMT+2);
• – Switzerland Consumer Price Index (m/m) at 09:30 (GMT+2);
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+2);
• – US FOMC Member Bostic Speaks (m/m) 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

As of Thursday’s stock market close, the Dow Jones (US30) index added 0.03%, while the S&P 500 (US500) index fell by 0.34% yesterday. The NASDAQ Technology Index (US100) closed at a negative 0.56% on Thursday. Interest rate-sensitive technology stocks came under pressure yesterday after better-than-expected US labor market reports pushed bond yields up and lowered expectations for a Fed interest rate cut.

Weekly initial jobless claims fell by 18,000 to a 2-month low of 202,000, indicating a stronger labor market than expected at 216,000. In addition, the December employment change from ADP rose by 164,000, indicating a more robust labor market than expectations of 125,000 and the largest increase in 4 months. Markets estimate the odds of a 25bp rate cut at the next FOMC meeting on January 30-31 at 7% and at the March 19-20 meeting at 70%.

Canada’s manufacturing PMI declined in the second quarter of 2020 at the sharpest pace since the pandemic, limiting the central bank’s (BoC) ability to fight inflation with restrictive policy. Meanwhile, concerns over weaker global oil demand dampened foreign exchange inflows, robbing the Canadian currency of support.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.48%, France’s CAC 40 (FR40) gained 0.52% yesterday, Spain’s IBEX 35 (ES35) added 1.28% yesterday, and the UK’s FTSE 100 (UK100) closed at a positive 0.53%.

Germany and France saw a slight increase in inflation, mainly due to higher energy prices, which coincided with market forecasts. In other economic news, the Eurozone PMI showed a seventh consecutive month of contraction in private sector activity, albeit at a slower pace than originally forecast.

The latest business activity data confirmed that the UK economy remains resilient to high interest rates. UK consumer borrowing increased by £2.0 billion in November, the highest level since March 2017 and exceeding the expected £1.4 billion increase. In addition, home purchase loans totaled 50.1k, which also exceeded forecasts. Finally, the final PMI showed that UK services output rose more strongly in December than originally anticipated, with optimism hitting a seven-month high.

Crude oil and gasoline prices moved to the downside as crude inventories unexpectedly rose in the EIA’s weekly report on Thursday, suggesting weak energy demand in the US.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was down by 0.53%, China’s FTSE China A50 (CHA50) decreased by 0.84% yesterday, Hong Kong’s Hang Seng (HK50) closed near its opening price, and Australia’s ASX 200 (AU200) was at a negative 0.39% on the day.

Chinese markets continue to underperform. Concerns about China weighed on Asian markets after ratings agency Fitch downgraded the country’s four largest state-owned asset managers on Thursday.

The offshore yuan slipped to 7.15 per dollar, falling to its lowest level in three weeks, facing pressure from a strengthening dollar as traders cut aggressive bets on the US Federal Reserve interest rate cut this year. Earlier in the week, the yuan also came under pressure after official data showed that activity in China’s manufacturing sector contracted further in December. This reinforced bets that the People’s Bank of China (PBoC) may ease policy further this year to support the fragile and uneven economic recovery. Markets expect a cut in key lending rates and another reduction in reserve requirement ratios in the first half of this year.

S&P 500 (US500) 4,688.68 −16.13 (−0.34%)

Dow Jones (US30) 37,440.34 +10.15 (+0.03%)

DAX (DE40)  16,617.29 +78.90 (+0.48%)

FTSE 100 (UK100) 7,723.07 +40.74 (+0.53%)

USD Index  102.40 −0.09 (−0.09%)

• – Japan Services PMI (m/m) at 02:30 (GMT+2);
• – German Retail Sales (m/m) at 09:00 (GMT+2);
• – Switzerland Retail Sales (m/m) at 09:30 (GMT+2);
• – UK Construction PMI (m/m) at 11:30 (GMT+2);
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+2);
• – US Unemployment Rate (m/m) at 15:30 (GMT+2);
• – Canada Unemployment Rate (m/m) at 15:30 (GMT+2);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+2);
• – US ISM Services 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 JustMarkets

As of Wednesday’s stock market close, the Dow Jones (US30) index decreased by 0.76%, while the S&P 500 (US500) index was down by 0.80% yesterday. The NASDAQ Technology Index (US100) closed negative by 1.18% on Wednesday. The S&P 500 Index (US500) fell to a 2-week low, the Dow Jones Index (US30) fell to a one-week low, and the NASDAQ Index (US100) fell to a 3-week low.

The minutes of the December 12-13 FOMC meeting did not indicate an imminent Fed rate cut and provided support for the dollar. The minutes also showed that policymakers agreed that it is appropriate to maintain a restrictive policy for some time until inflation begins to decline steadily. Markets estimate the odds of a -25bp rate cut at the next FOMC meeting on January 30-31 at 9% and at the next meeting on March 19-20 at 77% (down from 99% a week ago).

US economic news was mixed yesterday: activity in the US manufacturing sector was stronger than expected last month, but US job openings unexpectedly fell in November. The US ISM manufacturing index for the decade rose by 0.7 to 47.4, beating expectations of 47.1. The number of open job openings in the US for November unexpectedly fell by 62,000 to a 2-year low of 8.790 million, indicating a weaker labor market than expectations of a rise to 8.821 million.

Equity markets in Europe were mostly down yesterday. The German DAX (DE40) fell by 1.38%, the French CAC 40 (FR40) lost 1.58% yesterday, the Spanish IBEX 35 (ES35) decreased by 1.26% yesterday, and the British FTSE 100 (UK100) closed negative by 0.51%.

Inflation statistics for the Eurozone are expected to be released this week, following data from Germany today. Inflation is forecast to rise to 3% year-on-year in December, up from 2.4% in the previous month. This would be the highest reading in three months and the biggest rise in a single month since October 2022. Nevertheless, markets are questioning the ECB’s hawkish appetite. The policy rate has continued to move downward since the December meeting. Analysts expect the first 25 basis points (bps) rate cut to come no later than April.

Saudi Arabia officially joins the BRICS bloc. Prince Faisal bin Farhan said the BRICS group is a beneficial and important channel to strengthen economic cooperation. Previously, the BRICS bloc included Brazil, Russia, India, China, and South Africa. Still, it will now double as the United Arab Emirates, Egypt, Iran, and Ethiopia will join along with Saudi Arabia. Pakistan has also applied to join BRICS. Saudi Arabia’s biggest oil consumer, China, has led calls for BRIC expansion to become a counterweight to the West.

Crude oil prices jumped on Wednesday on concerns about dwindling global oil supplies after Libya said it was shutting down its Sharara oil field after protesters stormed the facility. The Sharara oil field is Libya’s largest and pumps about 300,000 barrels per day.

Iran’s dispatch of a warship to the Red Sea is the boldest move it has made to challenge US forces on a key trade route, emboldening Houthi militants whose attacks have disrupted shipping over the past two months. Tehran is unlikely to want a direct confrontation—its old frigate is no match for the US-led maritime task forces patrolling the waters off Yemen, but it takes the projection of Iranian power in the region to a new level and heightens tensions in the Middle East.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) was not trading due to holidays, China’s FTSE China A50 (CHA50) was down by 1.67% yesterday, Hong Kong’s Hang Seng (HK50) fell by 0.85% by Wednesday’s close, and Australia’s ASX 200 (AU200) was negative by 1.37% for the day.

Fitch downgraded four Chinese state-owned asset managers by one notch and placed three of the four companies under surveillance for further potential downgrades. The rating agency cited growing pressure on the four companies due to the ongoing downturn in the real estate market and increased uncertainty about the government’s ability to support the asset managers’ finances. This, in turn, has led to uncertainty over the ability of state-owned companies to buy back non-performing assets on the open market, which is weighing unfavorably on China’s financial markets. At the same time, Taiwan should benefit from the semiconductor sector’s recovery from a severe downturn in 2023.

S&P 500 (US500) 4,704.81 −38.02 (−0.80%)

Dow Jones (US30) 37,430.19 −284.85 (−0.76%)

DAX (DE40)  16,538.39 −230.97 (−1.38%)

FTSE 100 (UK100) 7,682.33 −39.19 (−0.51%)

USD Index  102.51 +0.31 (+0.30%)

• – Australia Services PMI (m/m) at 00:00 (GMT+2);
• – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2);
• – China Caixin Services PMI (m/m) at 03:45 (GMT+2);
• – German Services PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – UK Services PMI (m/m) at 11:30 (GMT+2);
• – German Consumer Price Index (m/m) at 15:00 (GMT+2);
• – US ADP Non-Farm Employment Change (m/m) at 15:15 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Services PMI (m/m) at 16:45 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2);
• – US Crude Oil Reserves (w/w) 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.