InvestMacro

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.

By Matheus de Oliveira Pereira, Universidade Estadual Paulista (Unesp) 

In December 2001, Argentina experienced one of the most dramatic moments in its history. The collapse of convertibility – the monetary stabilisation plan that established parity between the dollar and the peso – brought tens of thousands of people onto the streets to protest against the government’s confiscation of their money, the “corralito”.

In an already historic moment, then-President Fernando de la Rúa fled the Casa Rosada in a helicopter after resigning, to the disbelief of the demonstrators occupying Plaza de Mayo.

Almost 22 years later, the Argentinian population seems to have finally found a figure who could effectively express the “let them all go” slogan that marked that December.

Javier Milei, a far-right economist and founder of the La Libertad Avanza (LLA) party, was elected president of Argentina by defeating Peronist Sergio Massa in the second round held last Sunday.

The more than ten-point lead between Milei and Massa once again called into question the credibility of the polling institutes, which had been predicting a tight race defined by narrow margins. However, there were signs this picture was wrong since the first round. In the first round of voting in October, the sum of the votes given to Milei and Patrícia Bullrich already exceeded Massa’s vote by around 15%.

Victory in 20 of the country’s 23 provinces

In the end, Milei managed to retain more than 80% of Bullrich’s votes and expanded his electoral base by more than 324,000 votes compared to the right-wing’s performance in the first round. The result was a resounding victory, with Milei beating Massa in 20 of the country’s 23 provinces, as well as the federal capital, Buenos Aires. In traditional anti-Peronist strongholds, such as Mendoza, the difference was over 40%, but Milei won in five of the eight provinces currently governed by Peronism.

Understanding the reasons behind this situation is an endeavour that will last for some years. In a preliminary analysis, the results can be read as the expected end of an atypical electoral cycle in which a society punished by a decade of economic stagnation and various failed stabilisation plans decided to punish the traditional political forces. In other words, faced with the rejection of known formulas, the unknown was embraced.

The striking fact is that this discontent has found its main representative in Javier Milei. Milei is an aggressive figure, visibly unprepared, without firm social foundations and who has become known more for idiosyncrasies than for the defence of a project or a track record in politics.

Extreme and rabid campaigning

Milei ran a campaign in his image and likeness: histrionic, extreme and angry, symbolised by the chainsaw with which he sought – metaphorically, one hopes – to destroy the “caste”, the expression by which he referred to the country’s politicians. To this, he added half a dozen slogans (“dollarisation”, “freedom”, “end the Central Bank”), about which little explanation was given, and built the successful campaign that took him to the Casa Rosada.

Understanding this phenomenon requires consideration of transformations underway in Argentine society, ranging from the changes wrought by communication in the internet age to the advance of job insecurity and the marginalisation of large parts of the population from markets and formal state protection networks.

In this sense, it must be recognised that Milei has shown a greater ability to read the current situation than his opponents. He understood that fatigue with the government would not be represented in gradual formulas, as proposed by the coalition Juntos por el Cambio, and made room for accepting a shock therapy proposal.

In this respect, the proposal to dollarise the economy proved a smart electoral move, as it won over younger voters, who have no memory of the collapse of the 1990s and feel the direct impact of a stagnant economy just as they enter the labour market.

Whilst it is necessary to broaden the effort to understand the roots of this result, it is also necessary to reflect on its implications moving forward.

‘Change needs to be drastic, with no middle ground’

Milei himself seems to be aware that his agenda is less feasible than he made it out to be during the campaign. During his victory speech, Milei made no reference to dollarisation or the abolition of the Central Bank, but he made it clear the path he intends to follow is one of shock therapy. He stated: “The changes we need are drastic. There is no room for gradualism, there is no room for middle ground.”

Implementing this shock agenda represents a politically very complex operation. Passing laws and projects that require a qualified majority will require agreements with sectors of Peronism, but the challenge doesn’t end there. The adoption of shock therapy tends to produce very costly effects in terms of employment and income, which could unleash waves of protests that could jeopardise the country’s already difficult governability.

In this context, Milei’s political sustainability will depend on building a network of support that goes beyond votes in the House and Senate and makes a name for itself on the streets.

Will Milei be restrained?

To what extent Milei will be able to make these articulations without losing his anti-system legitimacy is unknown.

Another open question, and a potentially more serious one, concerns the impact of Milei’s presidency on Argentina’s democratic institutions. At the moment, there seems to be an expectation in the country’s traditional circles that the president-elect will be moderate, restrained by the weight of the office, and that his virulent tone is more a candidate’s speech than an expression of temperament.

However, one of the lessons to be learned from the experiences of Donald Trump and Jair Bolsonaro in Brazil is that expectations of moderation are frustrated by far-right politicians. The notion that the Republican Party or the armed forces would contain Trump and Bolsonaro, respectively, was not only wrong, but what we saw was a radicalisation of these actors, who mostly adhered to the authoritarian projects of their leaders.

Authoritarian DNA

To deny the authoritarian DNA of Milei’s project, as the traditional Argentinian right has done, is to close one’s eyes to the obvious in order to avoid facing one’s own contradictions. In the campaign committee, posters with Milei’s face were accompanied by the phrase “the only solution”.

Now, if a figure claims to be the only solution to the country’s problems, all those who oppose that solution automatically become part of the problem.

How the new Argentine president intends to deal with this scenario is something we’ll soon find out, but the clues offered by Milei and Argentine history suggest that the vibrant capacity for mobilisation that distinguishes Argentine society may be more necessary than ever.

About the Author:

Matheus de Oliveira Pereira, Pesquisador do INCT – INEU e do GEDES, Universidade Estadual Paulista (Unesp)

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

By JustMarkets

US stock indices continued their rally yesterday. At the close of the stock exchange, the Dow Jones Index (US30) rose by 0.58%, and the S&P 500 Index (US500) gained  0.74%. The NASDAQ Technology Index (US100) closed positive by 1.13% on Monday. At the same time, the S&P 500 Index (US500) and Dow Jones (US30) hit 3-month highs, and the NASDAQ Index (US100) reached a year high. Rising technology stocks led the overall market higher, with Microsoft (MSFT) and Nvidia (NVDA) rising to record highs amid optimism about artificial intelligence.

Favorable outlooks for the holiday shopping season are also lending support to stocks. According to a Deloitte survey, consumers plan to spend an average of $567 during Black Friday and Cyber Monday, up 13% from last year. Additionally, the National Retail Federation predicts that 182 million people will shop between Thanksgiving and Cyber Monday, the highest number since 2017.

Bearish factors include hawkish comments from FRB President Richmond Barkin, who said he favors raising the interest rate for longer due to unsustainable inflation. US leading indicators for October declined by 0.8% m/m, slightly weaker than expectations of 0.7% m/m and the largest decline in 6 months.

Microsoft Corporation (MSFT) shares hit record highs yesterday after recently fired OpenAI CEO Sam Altman joined the tech giant.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) decreased by 0.11%, France’s CAC 40 (FR40) added 0.18% on Monday, Spain’s IBEX 35 (ES35) jumped by 0.79%, and the UK’s FTSE 100 (UK100) closed negative by 0.11%.

Ahead of the release of this week’s Autumn Budget, UK Prime Minister Rishi Sunak promises to cut debt and cut taxes to further boost the country’s economy. Today, Prime Minister Sunak tweeted, “Now that inflation is halved, we can turn our attention to cutting tax… We will reward work by cutting taxes and reforming our benefits system so work always pays.” In another tweet, Prime Minister Sunak added: “I will do what is necessary to get our debt down and provide financial security. That will help keep inflation falling and get mortgage rates back down to affordable levels.”

Monday’s decline in the dollar index to a 2.5-month low helped energy prices. Crude oil prices also rose amid concerns that OPEC+ countries may extend and even deepen oil production cuts at a meeting this weekend. OPEC+ will meet in Vienna on November 25-26 to discuss extending oil production cuts. Geopolitical concerns have heightened shipping risks in the Middle East due to the war between Israel and Hamas and are supporting crude prices after a Japanese-chartered Israeli ship was hijacked Sunday in the Red Sea by Iranian-backed Houthi rebels. The rebels have said they support Hamas in the conflict and will continue attacks on Israeli territory and ships.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) decreased by 0.59% yesterday, China’s FTSE China A50 (CHA50) added 0.33% on Monday, Hong Kong’s Hang Seng (HK50) was up by 1.86% on the day, and Australia’s ASX 200 (AU200) was positive by 0.13%. Most Asian stocks rose at the open on Tuesday. Optimism about a recovery in China’s real estate sector is boosting sentiment. Yesterday, there were reports that the Chinese government plans to take additional measures to support the sector.

Nvidia (NVDA) will report its earnings for September on Tuesday after the US market close. EPS is estimated to be $3.36 on revenue of $16.18 billion. For the past three quarters, Nvidia has consistently beaten forecasts, citing a huge increase in demand due to advances in artificial intelligence. The company develops chips that are specifically used to develop and power artificial intelligence platforms that place high demands on computing resources. Nvidia’s strong results invariably spark a rally in Asian chip companies and have also been the driving force behind a significant rally in Japanese stocks this year. Nvidia recently unveiled a new flagship chip for AI development, the H200.

S&P 500 (F)(US500) 4,547.38 +33.36 (+0.74%)

Dow Jones (US30) 35,151.04 +203.76 (+0.58%)

DAX (DE40)  15,901.33 −17.83  (−0.11%)

FTSE 100 (UK100) 7,496.36 −7.89 (−0.11%)

USD Index  103.49 −0.43 (−0.41%)

• – Australia RBA Bullock Speech at 01:00 (GMT+2);
• – Australia RBA Meeting Minutes at 02:30 (GMT+2);
• – Switzerland Trade Balance at 09:00 (GMT+2);
• – Hong Kong Inflation Rate at 10:30 (GMT+2);
• – Canada Consumer Price Index (m/m) at 15:30 (GMT+2);
• – US Existing Home Sales (m/m) at 17:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 18:00 (GMT+2);
• – US FOMC Meeting Minutes 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.