InvestMacro

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 0.39%, while the S&P 500 Index (US500) added 0.81%. The NASDAQ Technology Index (US100) closed positive by 1.35% on Wednesday. Stocks closed modestly higher on Wednesday as lower bond yields temporarily eased interest rate concerns and supported gains in equities. Bond yields fell after the monthly ADP employment report showed fewer jobs than expected, a dovish factor for Fed policy.

The ADP US employment change for September came in at an 89,000 increase, weaker than expectations of 150,000 and the lowest increase in 2.5 years. The ISM Services Business Activity Index for September fell from 0.9 to 53.6, stronger than expectations of 53.5. Factory orders in the US for August rose by 1.2% m/m, stronger than expectations of 0.3% m/m.

Alphabet (GOOGL) closed higher by more than 2% after introducing the new Pixel 8 and Pixel 8 pro phones, as well as the new Pixel Watch. The company also said it will release a version of its Bard artificial intelligence-powered virtual assistant. Palantir Technologies (PLTR) closed higher by more than 5% as the company emerged as the top bidder for a contract to modernize the UK’s National Health Service.

Equity markets in Europe were mostly down on Tuesday. Germany’s DAX (DE40) added 0.10%, France’s CAC 40 (FR 40) closed at its opening price, Spain’s IBEX 35 (ES35) fell by 0.58%, and the UK’s FTSE 100 (UK100) closed down by 0.77%. Eurozone retail sales fell by 1.2% m/m in August, weaker than expectations of 0.5% m/m and the largest decline in 8 months. The eurozone goods and services price index came in at a record drop of 11.5% y/y in August after 7.6% y/y in July, which was in line with expectations.

ECB President Lagarde said yesterday that future ECB decisions “will ensure that interest rates are set at sufficiently restrictive levels for as long as necessary.” Investors viewed this ECB stance as hawkish.

On Wednesday, Saudi Arabia and Russia announced they would maintain their oil production cuts through the end of the year. But oil prices fell by nearly 6%, marking the biggest one-day sell-off since September 2022. The collapse in oil prices on Wednesday came amid several factors. Chief among them was concern about the state of the global economy, especially the most vulnerable Europe versus the relatively robust US economy. Another driving force behind Wednesday’s drop in oil prices was the seasonal slowdown in US demand, a fact that seems to have been missed by those betting that the last quarter’s oil rally would continue indefinitely.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 2.28% on Wednesday, China’s FTSE China A50 (CHA50) will not trade for the rest of the week due to holidays, Hong Kong’s Hang Seng (HK50) fell by 0.78%, and Australia’s ASX200 (AU200) was negative 0.77%.

The Australian Bureau of Statistics released the trade balance data for August, which showed a significant increase in Australian exports (+4% for the month while -2% was expected), which may provide temporary support to the Australian dollar (AUD). Why temporary? Because the AUD is being dovishly supported by the Reserve Bank of Australia (RBA).

S&P 500 (F)(US500) 4,263.75 +34.30 (+0.81%)

Dow Jones (US30) 33,129.55 +127.17 (+0.39%)

DAX (DE40)  15,099.92 +14.71 (+0.10%)

FTSE 100 (UK100) 7,412.45 −57.71 (−0.77%)

USD Index  106.78 −0.21 (−0.20%)

• – Australia Trade Balance (m/m) at 03:30 (GMT+3);
• – German Trade Balance (m/m) at 09:00 (GMT+3);
• – UK Construction PMI (m/m) at 11:30 (GMT+3);
• – Canada Trade Balance (m/m) at 15:30 (GMT+3);
• – US Trade Balance (m/m) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – Canada Ivey PMI (m/m) at 17:00 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US FOMC Member Daly Speaks (m/m) at 18:30 (GMT+3);
• – US FOMC Member Barr Speaks (m/m) at 19:15 (GMT+3).

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 yesterday’s stock market close, the Dow Jones Index (US30) was down by 1.29%, while the S&P 500 Index (US500) decreased by 1.37%. The NASDAQ Technology Index (US100) closed negative by 1.87% on Tuesday. The S&P 500 (US500) and Dow Jones Industrials (US30) indices fell to 4-month lows as the dollar index and government bond yields surged to 16-year highs. Hawkish comments from Fed Chair Cleveland Mester and Atlanta Fed Chair Bostic pushed 10-year T-note yields to a 16-year high as they voiced their support for keeping interest rates higher. Economic data on the labor market also supported the dollar. The US job openings rose by 690,000 from the previous month to 9.61 million in August, well above the market’s consensus forecast of 8.80 million and indicating a robust labor market. Investors fear that the Fed will raise the rate once again this year (the probability is already over 40%).

JPMorgan Asset Management warned that there is a risk of further stock market declines due to rising interest rates, “We didn’t expect this rate hike. This is something that will at least slow or even reverse the progress of stock markets.” Airbnb (ABNB) stock prices fell more than 6% and topped the list of losers on the Nasdaq 100 index after KeyBanc Capital Markets downgraded the company’s stock to sector Perform from Outperform. Goldman Sachs (GS) was down more than 3% and topped the list of losers in the Dow Jones Industrials after Morgan Stanley cut its target price on the stock to $329 from $347.

Prospects for a reduction in global fuel supplies are lending support to oil. Late last month, Russia announced a ban on gasoline and diesel exports in an attempt to stabilize domestic fuel prices. The ban will reduce fuel supplies by about 1 million BPD, about 3.4% of total global demand. The OPEC+ country will meet today. No surprises are expected – the countries are forecast to continue their previously planned cuts.

Asian markets were mostly declining yesterday. Japan’s Nikkei 225 (JP225) decreased by 1.64% on Tuesday, China’s FTSE China A50 (CHA50) will not trade for the rest of the week due to holidays, Hong Kong’s Hang Seng (HK50) was down by 2.69% on Tuesday, and Australia’s ASX 200 (AU200) was negative 1.28%.

The Reserve Bank of New Zealand (RBNZ) left the interest rate unchanged at 5.5% and expressed a relatively soft stance on the future trajectory of the OCR in an accompanying statement. Key factors determining the likelihood and size of a November tightening will be third-quarter inflation data due on October 17 and labor market data on November 1.

Japan’s finance ministry conducted another currency intervention yesterday to support the exchange rate, although there was no official statement from officials. A spokesman for Japan’s finance ministry was not available to comment on whether Japan had intervened against the yen. But analysts pointed to other explanations, such as standing orders to sell dollars at the 150 level because of the threat of official action. Others speculate that there may have been a check by Japanese authorities on exchange rates at banks, a move often seen as a prelude to further official action.

S&P 500 (F)(US500) 4,229.45 −58.94 (−1.37%)

Dow Jones (US30) 33,002.38 −430.97 (−1.29%)

DAX (DE40)  15,085.21 −162.00 (−1.06%)

FTSE 100 (UK100) 7,470.16 −40.56 (−0.54%)

USD Index  107.06 +0.16 (+0.15%)

• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – New Zealand Interest Rate Decision at 04:00 (GMT+3);
• – New Zealand RBNZ Rate Statement at 04:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks (m/m) at 11:15 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone Retail Sales (m/m) at 12:00 (GMT+3);
• – OPEC+ meeting at 13:00 (GMT+3);
• – US ADP Nonfarm Employment Change (m/m) at 15:15 (GMT+3);
• – US ISM Services PMI (m/m) at 17:00 (GMT+3);
• – US FOMC Member Bowman Speaks (m/m) at 17:25 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – Eurozone ECB President Lagarde Speaks (m/m) at 19:00 (GMT+3).

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 yesterday’s stock market close, the Dow Jones Index (US30) decreased by 0.22%, while the S&P 500 Index (US500) added 0.08%. The NASDAQ Technology Index (US100) closed positive by 0.57% on Monday. Rising T-note yields lent support to the dollar after the 10-year bond yield rose to a 16-year high of 4.701% on Monday. The US economic news released on Monday was mostly better than expected and was bullish for the dollar. The ISM manufacturing index for September rose by 1.4 to 49.0, beating expectations of 47.9. In addition, construction spending for August rose by 0.5% m/m, matching expectations.

Fed Chair Bowman’s hawkish comments on Monday were favorable for the dollar when she stated: “I continue to expect that further interest rate increases are likely to be needed to bring inflation back to the 2% level in a timely manner, as high energy prices could reverse some of the gains we have seen in recent months.” For today, markets are factoring in a 31% probability that the FOMC will raise the lending rate by 25 bps at its next meeting on November 1 and a 51% probability that the rate will be raised by 25 bps at the meeting that ends on December 13.

Goldman Sachs said on Monday that US large-cap tech stocks are likely to perform well in the third quarter after the recent sell-off led to lower valuations, and “the divergence between lower valuations and improving fundamentals represents an opportunity for investors.”

Equity markets in Europe were mostly down on Monday. Germany’s DAX (DE40) fell by 0.91%, France’s CAC 40 (FR40) lost 0.94% yesterday, Spain’s IBEX 35 (ES35) declined by 1.16%, and the UK’s FTSE 100 (UK100) closed down by 1.28%. On Monday, ECB Vice President Gindos said that keeping interest rates at current levels will help bring inflation down to the ECB’s 2% target and that talk of a rate cut by the ECB is premature. This is a negative for the European currency as the ECB is likely to end its tightening cycle.

The rally of the dollar index to a 10-month high on Monday had a negative impact on energy prices. The likelihood of further interest rate hikes could slow economic growth and energy demand. But comments from the United Arab Emirates energy minister on Monday lent support to oil prices as he favored maintaining OPEC+ oil production cuts, saying the alliance was pursuing the “right policy.” Tensions in the oil market are expected to continue as OPEC+ production cuts are extended. Saudi Arabia recently said it would maintain its unilateral oil production cut of 1.0 million BPD through December. The move will keep Saudi oil production at around 9 million BPD, the lowest in three years.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.31% on Monday, China’s FTSE China A50 (CHA50) will not trade for the rest of the week due to holidays, Hong Kong’s Hang Seng (HK50) was not trading yesterday, and Australia’s ASX 200 (AU200) was negative 0.22%.

Yesterday morning, minutes from the Bank of Japan’s meeting were released, discussing the move out of negative interest rates. One board representative expressed risk management concerns about a major policy shift, as the BoJ may have enough data to make a decision on negative rates in the first quarter of next year. The prospect of a move away from negative interest rates has led to another rise in yields on 10-year Japanese government bonds, requiring the bank to make unplanned bond purchases. Japanese officials have been warning markets against currency speculation for weeks now, with the Japanese yen reaching last year’s levels when the BoJ intervened.

China’s manufacturing PMI for September rose by 0.5 to a 6-month high of 50.2, exceeding expectations of 50.1. In addition, China’s non-manufacturing PMI for September rose by 0.7 to 51.7, exceeding expectations of 51.6.

The Reserve Bank of Australia kept its interest rate unchanged at 4.1%. At the same time, the central bank reiterated its warning that further tightening might be needed to contain inflation within a “reasonable time frame.”

S&P 500 (F)(US500) 4,288.39 +0.34 (+0.08%)

Dow Jones (US30) 33,433.35 −74.15 (−0.22%)

DAX (DE40)  15,247.21 −139.37 (−0.91%)

FTSE 100 (UK100) 7,510.72 −97.36 (−1.28%)

USD Index  107.02 +0.80 (+0.75%)

• – US FOMC Member Mester Speaks (m/m) at 02:30 (GMT+3);
• – Australia RBA Interest Rate Decision (m/m) at 06:30 (GMT+3);
• – Australia RBA Rate Statement (m/m) at 06:30 (GMT+3);
• – Switzerland Consumer Price Index (m/m) at 09:30 (GMT+3);
• – US FOMC Member Bostic Speaks (m/m) at 15:00 (GMT+3);
• – US JOLTs Job Openings (m/m) at 17:00 (GMT+3).

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

Investors looking to build wealth will largely overlook World Bank reports about China and east Asia facing the worst economic outlook in half a century, predicts the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.

The prediction from Nigel Green of deVere Group comes as the World Bank said it now anticipates China’s output would grow 4.4% in 2024, down from the 4.8% it expected in April.

It also downgraded its 2024 forecast for GDP growth for developing economies in east Asia and the Pacific of 0.2%.

He comments: “Despite the World Bank’s gloomy outlook on China’s and east Asia’s growth and the challenges posed by factors like US protectionism and rising debt levels, global investors will continue to view the region as a highly attractive investment destination.

One of the primary reasons is the robust economic fundamentals. While growth rates may slow down, East Asian economies have demonstrated their resilience and adaptability in the face of various challenges. Countries like China, South Korea, and Vietnam have diversified their economies, focusing on innovation, technology, and export-oriented industries.

“This diversification reduces their vulnerability to economic shocks and demonstrates a commitment to long-term growth.”

East Asia is home to some of the world’s most populous countries, including China and Indonesia.

“This vast consumer base represents a significant opportunity for businesses to expand their market reach. Rising incomes and an emerging middle class in the region are driving consumer spending, making east Asia an attractive destination for companies looking to tap into this growing market.”

While some East Asian countries, like Japan, are facing aging populations, others, such as Indonesia and the Philippines, have young and growing populations. Demographic trends play a crucial role in determining long-term economic prospects.

Younger populations can drive consumption, labour force growth, and innovation, creating favorable conditions for investment.

He continues: “The majority of east Asian countries are actively investing in infrastructure development. Projects like high-speed railways, smart cities, and ports are not only improving connectivity within the region but also creating investment opportunities for both domestic and foreign investors.

“Naturally, these infrastructure investments help to lead to long-term economic growth and stability.

“Also, something that never gets underplayed by investors, is the strategic location as a crossroads between the Asia-Pacific region and the rest of the world, making it a hub for trade and investment.”

With well-established supply chains and logistical networks, the region offers a competitive advantage for businesses seeking to access global markets.

Furthermore, east Asia has established itself as a global leader in technology and innovation.

Countries like China and South Korea are home to some of the world’s most prominent tech companies. The region’s commitment to research and development, combined with a competitive business environment, fosters innovation and entrepreneurship. This technological prowess makes East Asia an appealing destination for investors seeking exposure to cutting-edge industries.

The deVere CEO observes: “In addition east Asia boasts a highly skilled and educated workforce. Countries like China – which produces 1.4 million engineers a year – and South Korea have invested heavily in education and vocational training, producing a talent pool that is well-equipped for various industries, including tech, manufacturing, and finance.”

In recent years, many East Asian governments have implemented policies to attract foreign investment. These policies include tax incentives, streamlined regulatory processes, and investment protection measures. This environment is conducive for luring foreign capital.

Nigel Green concludes: “The World Bank report says one of the world’s main growth engines is facing its slowest pace of growth since the 1960s.

“However, we fully expect east Asia to remain a highly attractive destination for global investors,.

“The region’s robust economic fundamentals, large consumer markets, infrastructure development, strategic location, skilled workforce, investment-friendly policies, technological advancements, diversification benefits, demographic trends, and regional cooperation all contribute to its enduring appeal for investors who are serious about growing their wealth.”

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 offices across the world, over 80,000 clients and $12bn under advisement.

By JustMarkets

At Friday’s close, the Dow Jones Index (US30) decreased by 0.47% (-1.18% for the week), while the S&P 500 Index (US500) lost 0.27% (-0.52% for the week). The NASDAQ Technology Index (US100) closed positive by 0.14% (+0.36% for the week) on Friday. The PCE core deflator for August, the Fed’s preferred measure of inflation, fell from 4.3% to 3.9% y/y, the lowest reading in 2 years. The favorable news of lower inflation boosted positive sentiment in equities. However, hawkish comments from New York Fed President Williams on Friday pushed bond yields slightly higher and pulled stocks back from better levels when he stated, “My current assessment is that we are at, or near, the peak level of the target range for the federal funds rate, though I expect we will need to maintain a restrictive stance of monetary policy for some time.”

The fundamental picture in the stock market appears to be changing as stocks are unable to bounce back with the same vigor. Rising bond yields are putting pressure on tech companies, and investors are worried that inflated valuations of mega-companies, including Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN) could be another weakness. Meanwhile, the “hype” around artificial intelligence is decreasing, and tech stocks are showing signs of vulnerability to rate hikes.

A negative factor for stocks on Friday was the likely US government shutdown, as Republicans in the House of Representatives could not agree on a plan to continue funding federal operations until October 1. However, the US Congress passed a temporary funding bill on Saturday after Republican House Speaker Kevin McCarthy dropped an earlier demand by his party’s hardliners. The House voted 335-91 to fund the government through November 17. The move marked a profound shift from early last week when a government shutdown seemed all but inevitable. A government shutdown would mean that most of its 4 million employees would not receive a paycheck – whether they are working or not. And it would also have led to a shutdown of a host of federal agencies, from national parks to financial regulators.

Equity markets in Europe were mostly up Friday. Germany’s DAX (DE40) rose by 0.41% (-0.82% for the week), France’s CAC 40 (FR40) gained 0.26% on Friday (-0.61% for the week), Spain’s IBEX 35 (ES35) added 0.01% (-0.43% for the week), and the UK’s FTSE 100 (UK100) closed up by 0.08% (week-to-date -0.99%). The Eurozone Consumer Price Index for September declined to 4.3% y/y from 5.2% y/y in August, the lowest reading in nearly two years. German retail sales in August unexpectedly declined by 1.2% m/m, which was weaker than expectations of 0.5% m/m growth and was the biggest decline in the last 8 months. All these factors indicate that the ECB will probably not raise rates again.

With OPEC+ week ahead, there is likely to be an ongoing dispute over how much oil prices can rise. However, Saudi Arabia and Russia face some difficulty in developing a rally. Saudi oil imports to India totaled less than 500,000 barrels a day in September, the lowest monthly level in nearly a decade, as global benchmark Brent crude hit a high of nearly $98 from a March low just above $70. Oil shipments from Saudi ports last month were up 300,000-400,000 barrels a day from August – despite a so-called “lollipop cut” of one million barrels a day – and that trend could continue. Oil prices fell on the last trading day of September amid growing concern about how the world will cope with rising energy prices in the coming months.

Saudi Aramco agreed to buy a stake in MidOcean Energy for $500 million, making its first investment in liquefied natural gas in a bid to diversify beyond its core oil business. Global demand for fuel has surged, especially in Europe, which is replacing reduced gas and oil supplies from Russia.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell by 2.03% for the week, China’s FTSE China A50 (CHA50) decreased by 1.45%, Hong Kong’s Hang Seng (HK50) ended the week down by 1.31%, and Australia’s ASX 200 (AU200) ended the week positive by 0.28%.

On Monday, the Bank of Japan said it will conduct additional bond purchases in an effort to slow the rise in yields after benchmark yields hit a decade high.

The central banks of Australia and New Zealand will hold meetings this week. On Tuesday, the Reserve Bank of Australia (RBA) will hold its first meeting under the leadership of Michelle Bullock, the first woman to head the bank. The RBA is expected to leave the rate unchanged, but the RBA will leave the door open for further hikes in order to be flexible. Meanwhile, the Reserve Bank of New Zealand (RBNZ) will hold its policy meeting on Wednesday. Despite the RBNZ’s hawkish stance, market watchers do not expect a rate hike, but the RBNZ may hint at a hike in November.

S&P 500 (F)(US500) 4,288.05 −11.65 (−0.27%)

Dow Jones (US30) 33,507.50 −158.84 (−0.47%)

DAX (DE40)  15,386.58 +63.08 (+0.41%)

FTSE 100 (UK100) 7,608.08 +6.23 (+0.082%)

USD Index  106.17 −0.05 (−0.05%)

• – Japan Tankan Large Manufacturers Index (m/m) at 02:50 (GMT+3);
• – Japan Tankan Large Non-Manufacturers Index (m/m) at 02:50 (GMT+3);
• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Switzerland Retail Sales (m/m) at 09:30 (GMT+3);
• – Switzerland Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – German Manufacturing PMI (m/m) at 10:55 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – Canada Manufacturing PMI (m/m) at 16:30 (GMT+3);
• – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+3);
• – US Fed Chair Powell Speaks (m/m) at 18:00 (GMT+3);
• – US FOMC Member Harker Speaks (m/m) at 18:00 (GMT+3);
• – US FOMC Member Williams Speaks (m/m) at 20:30 (GMT+3).

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.