InvestMacro

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.