InvestMacro

By JustMarkets

As of Tuesday’s stock market close, the Dow Jones Index (US30) was up by 0.54%, while the S&P 500 (US500) increased by 0.73%. The NASDAQ Technology Index (US100) closed positive by 0.93% yesterday. Stocks rose moderately on Tuesday on the back of better-than-expected corporate earnings results. A negative factor for stocks was Tuesday’s stronger-than-expected US manufacturing activity data, which was hawkish for Fed policy. The S&P US manufacturing PMI for October unexpectedly rose to a 6-month high of 50.0, which was stronger than expectations of a decline to 49.5.

General Electric (GE) closed higher by more than 6% after reporting third-quarter adjusted EPS of 82 cents, well above the consensus of 56 cents, and raising its 2023 adjusted EPS guidance. Verizon Communications (VZ) shares are up more than 9%, leading gains in the S&P 500 (US500) and Dow Jones Industrials (US30), after the company reported third-quarter adjusted earnings per share of $1.22, which was better than the consensus estimate of $1.18. Coca-Cola Co (KO) closed higher by more than 3% after reporting 11% organic revenue growth in the third quarter, well above the consensus of 6.91%. Shares of Google Alphabet (GOOG) Inc. are down more than 5% after weaker-than-expected revenue growth from its cloud computing operations. Microsoft (MSFT) reported fiscal first-quarter results on Tuesday that beat Wall Street forecasts, as the tech giant’s investments in artificial intelligence fueled growth in its Azure cloud business. The stock price rose more than 4% after the report was published.

In the Middle East, French President Macron met with Prime Minister Netanyahu in Israel on Tuesday before calling for an international coalition to fight Hamas and warning other Iranian-backed militant groups against opening new fronts in the war between Israel and Hamas.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.54%, France’s CAC 40 (FR40) gained 0.63% on Tuesday, Spain’s IBEX 35 (ES35) fell by 0.28%, and the UK’s FTSE 100 (UK100) closed positive 0.20%.

The Eurozone manufacturing PMI for October unexpectedly fell by 0.4 to 43.0, weaker than expectations of a rise to 43.7. The German GfK consumer confidence index for November fell by 1.4 to a 7-month low of 28.1, weaker than expectations of 27.0. In her speech yesterday, ECB President Lagarde told the Presidents of the European Commission, European Council, and Eurogroup that stagnation and downside risks await the Eurozone economy in the next few quarters, although inflation risks have become more balanced.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) increased by 0.20%, China’s FTSE China A50 (CHA50) added 0.03%, Hong Kong’s Hang Seng (HK50) ended the day down by 1.05%, and Australia’s ASX 200 (AU200) ended Tuesday positive 0.19%. Chinese stocks continued their recovery rally on Wednesday after the government announced plans for a massive bond issue. Beijing announced plans to issue 1 trillion yuan ($1=7.3088 yuan) worth of government bonds to support the economy. Nevertheless, Chinese stocks remain near 2023 lows, having suffered significant losses on fears of slowing economic growth and a collapse in the real estate market. Despite Wednesday’s optimism, the factors that drove domestic markets lower are still in place.

Japan’s business activity index for the manufacturing sector for October was unchanged at 48.5. The services PMI for October fell by 2.7 to 51.1, the lowest reading in 10 months.

In Australia, the consumer price index unexpectedly rose. In annual terms, the inflation rate rose from 5.2% to 5.6%. In quarterly terms, the index rose from 0.8% to 1.2%. Such data gives grounds for further interest rate increase by the Reserve Bank of Australia next week.

S&P 500 (F)(US500) 4,247.68 +30.64 (+0.73%)

Dow Jones (US30) 33,141.38 +204.97 (+0.62%)

DAX (DE40)  14,879.94  +79.22 (+0.54%)

FTSE 100 (UK100) 7,389.70 +14.87 +(0.20%)

USD Index  106.26 +0.73 (+0.69%)

• – Australia Consumer Price Index (m/m) at 03:30 (GMT+3);
• – German Ifo Business Climate (m/m) at 11:00 (GMT+3);
• – US Building Permits (m/m) at 15:00 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3);
• – Canada BoC Monetary Policy Report at 17:00 (GMT+3);
• – Canada BoC Interest Rate Decision at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – Canada BoC Press Conference at 18:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 20:00 (GMT+3);
• – US Fed Chair Powell Speaks at 23:35 (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

American stock indices traded yesterday without any unified dynamics. At Monday’s close, the Dow Jones Index (US30) decreased by 0.58%, while the S&P 500 Index (US500) was down by 0.17%. The NASDAQ Technology Index (US100) closed positive by 0.27%. The decline in T bond yields on Monday was bearish for the US dollar and bullish for stock indices. The dollar on Monday initially found support in the jump in the 10-year bond yield to a new 16-year high, but then bond yields reversed and headed lower. From a fundamental perspective, the tightening of financial conditions in the US is certainly reducing the need for further monetary tightening, and many US Fed officials have moved to a less hawkish tone. Markets are currently pricing in just a 2% chance that the FOMC will raise the lending rate by 25 bps at its next meeting, which ends on November 1, and a 23% chance that the rate will be raised by 25 bps at its December 13 meeting.

The fear that the war between Israel and Hamas could escalate into a regional conflict is weighing on market sentiment. Western countries stepped up efforts to prevent the war between Israel and Hamas from escalating, and EU leaders supported the UN’s call for a “humanitarian pause” in the war. President Biden held talks with the presidents of Canada, France, Germany, and Italy to strengthen coordination among the allies. At the same time, late yesterday, there was news of explosions at three US military bases in the Middle East. This news interrupted Biden’s live-streamed remarks. Intelligence reports indicate that Iranian-backed militias are poised to step up attacks on US troops in the Middle East. Israel has said it supports diplomatic efforts to get Hamas to release hostages from Gaza, which could delay a possible ground invasion, but is not going to wait long to launch a ground offensive. Iran and its proxy forces in Lebanon, Iraq, and Yemen have warned they could retaliate against Israel if Israeli troops enter Gaza.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) rose by 0.02%, France’s CAC 40 (FR40) added 0.50% on Monday, Spain’s IBEX 35 (ES35) decreased by 0.37%, and the UK’s FTSE 100 (UK100) closed negative by 0.37%.

British consumers are curbing their spending ahead of the festive season, and the latest survey from Gfk suggests that the weather is not the only reason for this. Retail sales fell by 0.9% in September, well above expectations of a 0.3% decline. The Gfk Consumer Confidence Index fell back to 30. The outlook for the British economy remains bleak as growth is sluggish, and recent economic indicators point to a slowdown in manufacturing activity, while UK inflation remains stubbornly high.

The potential for an escalation of the conflict between Israel and Hamas and poor corporate earnings have left investors looking for safe havens, of which there are few left. The US dollar is not in the best position at the moment, as the US Federal Reserve does not plan to continue its tightening policy in the near future. According to economists, apart from the US dollar, only gold and the Swiss franc remain as safe havens. The Swiss franc is a longtime safe haven asset that recently hit its highest level against the euro since 2015 and has held up against the losses of its traditional peers.

Last Wednesday, the US said it would ease sanctions on Venezuela’s oil exports for six months in exchange for measures to ensure the country holds fair presidential elections next year. The easing of sanctions will bring additional oil supplies to the global market, which some analysts estimate will be about 200,000 barrels per day. However, oil traders believe that tension in the oil market will still remain due to the extension of the OPEC+ agreement on production cuts.

Asian markets were mostly declining yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.83%, China’s FTSE China A50 (CHA50) was down by 0.62%, Hong Kong’s Hang Seng (HK50) lost 0.72% on the day, and Australia’s ASX 200 (AU200) was negative by 0.82% on Monday. On Tuesday, most Asian stocks extended losses after weak business activity data in Japan and Australia. At the same time, Chinese markets rebounded from pre-pandemic lows thanks to a government fund starting to buy some stocks.

Japanese government bond (JGB) yields rose to new multi-year highs on Monday as investors assess the likelihood that the Bank of Japan will continue to adjust its yield curve control (YCC) policy next week. One possibility being discussed is an increase in the 1% ceiling for the 10-year yield.

S&P 500 (F)(US500) 4,217.04 −7.12 (−0.17%)

Dow Jones (US30) 32,936.41 −190.87 (−0.58%)

DAX (DE40)  14,800.72 +2.25 (+0.015%)

FTSE 100 (UK100) 7,374.83 −27.31 (−0.37%)

USD Index  105.62 −0.54 (−0.51%)

• – Australia Manufacturing PMI (m/m) at 01:00 (GMT+3);
• – Australia Services PMI (m/m) at 01:00 (GMT+3);
• – Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
• – Japan Services PMI (m/m) at 03:30 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
• – German Manufacturing PMI (m/m) at 10:30 (GMT+3);
• – German Services PMI (m/m) at 10:30 (GMT+3);
• – Australia RBA Gov Bullock Speaks at 11:00 (GMT+3);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+3);
• – UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
• – UK Services PMI (m/m) at 11:30 (GMT+3);
• – Eurozone ECB President Lagarde Speaks at 15:30 (GMT+3);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+3);
• – US Services PMI (m/m) at 16:45 (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 Wednesday’s stock market close, the Dow Jones Index (US30) decreased by 0.51%, while the S&P 500 Index (US500) lost 0.62%. The NASDAQ Technology Index (US100) closed yesterday negative by 0.63%. Stocks posted moderate losses on Thursday amid a stronger-than-expected US CPI report for September. In addition, weekly US initial jobless claims remained unchanged, which was hawkish for Fed policy. Thursday’s hawkish reports keep the likelihood of another Fed rate hike this year alive. Stocks continued to lose ground Thursday afternoon as T-bond yields rose further amid weak demand at the $20 billion auction of 30-year Treasury bonds.

Concerns that the conflict between Israel and Hamas will spread to the Middle East was another negative factor for stocks amid reports that Israel launched airstrikes on major airports in Damascus and Aleppo in Syria. In turn, Iran has begun moving military equipment to its western border. Whether this equipment will travel further through Iraq toward Israel is still unknown, but the geopolitical risks of another major war have increased significantly in recent days.

The US Consumer Price Index for September came in at 3.7% y/y, unchanged from August and stronger than the 3.6% y/y decline. The core CPI excluding food and energy for September declined to 4.1% y/y from 4.3% y/y in August, which was in line with expectations. US weekly initial jobless claims were unchanged at 209,000, indicating a slight strengthening of the labor market compared to expectations of a rise to 210,000.

FRB Boston President Collins commented that she favors a pause in Fed rate hikes.

Equity markets in Europe traded lower yesterday. Germany’s DAX (DE40) decreased by 0.23%, France’s CAC 40 (FR40) lost 0.37% on Thursday, Spain’s IBEX 35 (ES35) was 0.26% cheaper, and the UK’s FTSE 100 (UK100) closed positive by 0.32%.

ECB Governing Council spokesperson Centeno said yesterday, “At the current level of interest rates, we will make a significant contribution to the 2% inflation target. We will achieve this target by continuing with this monetary policy stance, holding it for some time until we are fully confident that inflation is falling.” Another representative of the ECB Governing Council, Wunsch, said, “If we continue to see inflation figures in line with the forecast, we will not need to raise interest rates again.” Minutes from the ECB’s September 13-14 meeting showed that the risks of too much tightening and too little tightening have become more balanced and the ECB will hold off on raising interest rates.

Crude oil prices gave up early gains on Thursday amid a stronger dollar and after the EIA’s weekly crude oil inventories report showed an unexpected rise in crude stockpiles and US crude production hit a record high. Oil initially opened higher on Thursday on concerns over the escalating conflict between Israel and Hamas. Oil was also supported by comments from Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, who said oil producers will continue to work together and be proactive to keep the oil market balanced.

Asian markets were predominantly rising yesterday. Japan’s Nikkei 225 (JP225) rose by 1.75%, China’s FTSE China A50 (CHA50) gained 0.85%, Hong Kong’s Hang Seng (HK50) rose by 1.93% and Australia’s ASX 200 (AU200) ended the day positive by 0.04%.

In China, the Consumer Price Index (CPI) was unchanged in September, missing forecasts for a 0.2% y/y rise. In August, the CPI rose by 0.1% y/y. On an annualized basis, core inflation, excluding food and fuel prices, was up by 0.8%, the same as in August. The Producer Price Index (PPI) fell to 2.5% y/y, marking the 12th consecutive negative month, although the rate of decline slowed from August. Economists had forecast a drop to 2.4% y/y. CPI inflation at zero indicates that deflationary pressures in China remain a real threat to the economy. The recovery in domestic demand will not be strong without significant stimulus from the government.

S&P 500 (F)(US500) 4,349.61 −27.34 (−0.62%)

Dow Jones (US30) 33,631.14 −173.73 (−0.51%)

DAX (DE40)  15,425.03 −34.98 (−0.23%)

FTSE 100 (UK100) 7,644.78 +24.75 (+0.32%)

USD Index  106.58 +0.76 (+0.72%)

• – Singapore GDP (q/q) at 03:00 (GMT+3);
• – China Consumer Price Index (m/m) at 04:30 (GMT+3);
• – China Producer Price Index (m/m) at 04:30 (GMT+3);
• – China Trade Balance (m/m) at 06:00 (GMT+3);
• – Sweden Consumer Price Index (m/m) at 09:00 (GMT+3);
• – Switzerland Producer Price Index (m/m) at 09:30 (GMT+3);
• – UK BoE Gov Bailey Speaks at 11:00 (GMT+3);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
• – US FOMC Member Harker Speaks at 16:00 (GMT+3);
• – Eurozone ECB President Lagarde Speaks (m/m) at 16:00 (GMT+3);
• – US Michigan Consumer Sentiment (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 

US Consumer Price Index (CPI) data published Thursday supports the case that the Federal Reserve will likely implement one more interest rate hike, says the CEO of one of the world’s leading financial advisory, asset management and fintech organizations.

The prediction from Nigel Green of deVere Group comes as September CPI inflation rises 3.7%, above expectations of 3.6%. US CPI is now up for four consecutive months. Core CPI inflation fell to 4.1%, in line with expectations.

He comments: “Taking into account the latest US CPI data, and the minutes from the most recent Federal Reserve meeting, which were published on Monday, we expect there to be one last 25 basis point hike at its two-day meeting beginning October 31.

“The Fed will be conscious of growing uncertainty of the trajectory of the world’s largest economy and the risks of overtightening – especially in times of growing geopolitical uncertainty; while at the same time, want to avoid complacency in the continuing battle against inflation.”

The deVere CEO continues: “As a result, we expect that interest rates will still continue to remain higher for longer.”

Based on the assertion that interest rate hikes are likely to be nearing an end, and high-interest rates are expected to continue, investors may want to consider rebalancing their portfolios.

“Financial institutions, such as banks and insurance companies, tend to benefit from higher interest rates as they can charge more for loans and earn higher yields on their investments. A portfolio allocation to financial services stocks or exchange-traded funds (ETFs) may be considered,” says Nigel Green.

“The energy sector also benefits from a robust economy and high interest rates. It’s typically positively correlated with economic growth and tends to perform well in such environments.

“Certain segments of the consumer discretionary sector, such as automotive, housing, and luxury goods, can perform well when interest rates are high. Consumer spending can remain strong, particularly if the economy is healthy, and these industries can benefit.

“Industrial companies often benefit from increased infrastructure spending and a robust economy. With expectations of continued high interest rates, these companies are likely to see growth opportunities in construction, manufacturing, and transportation.”

He goes on to add: “While technology stocks can be sensitive to interest rate changes, some tech companies continue to thrive in a high-interest rate environment, especially those with strong fundamentals and growth potential.

“Meanwhile, the healthcare sector is typically less sensitive to interest rate changes, making it a relatively stable option for a portfolio, as will essential goods, such as food, beverages, and household products.”

As ever, an investor’s best tool for mitigating risk and seizing opportunities is to remain properly diversified and by working with an independent financial advisor.

The FOMC since March 2022 has raised its key interest rate 11 times, taking it to a targeted range of 5.25%-5.5%, the highest level in 22 years.

Nigel Green concludes: “We don’t think we’re at the end of the hiking cycle just yet, even though we’re close, and rates will continue to be high, potentially impacting your investment portfolio.”

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 Wednesday’s close, the Dow Jones Index (US30) added 0.19%, while the S&P 500 Index (US500) was up by 0.43%. The NASDAQ Technology Index (US100) closed positive by 0.71% yesterday.

According to the FOMC minutes released on Wednesday last month, the Federal Reserve leadership considered the outlook for the US economy uncertain and said it would “proceed cautiously” in deciding whether to raise the benchmark interest rate further. Such caution is generally seen as an indication that the Fed is not inclined to raise rates in the near future. Economic data over the past few months have indicated that inflation is slowing, according to the September 19-20 meeting minutes. Policymakers added that more evidence of inflation slowing to the Fed’s 2% target is needed to be confident that inflation will slow to the Fed’s 2% target. Officials generally acknowledged that the risks to Fed policy are increasingly balanced between raising rates too high, which hurts the economy, and not raising them enough to contain inflation.

Late Tuesday, San Francisco Fed spokeswoman Daly said that tighter financial conditions could mean the Fed wouldn’t have to do as much in terms of interest rates. Also on Wednesday, Fed spokesman Waller said that the Fed finally got a very good hold on inflation and can now take an observational stance.

The US PPI for September rose by 0.5% m/m and 2.2% y/y, which was stronger than expectations of 0.2% m/m and 1.6% y/y. In addition, the Food & Energy Price Index rose by 0.3% m/m and 2.7% y/y, stronger than expectations of 0.2% m/m and 2.3% y/y.

Equity markets in Europe traded yesterday without any unified dynamics. German DAX (DE40) increased by 0.24%, French CAC 40 (FR40) declined by 0.44% on Wednesday, Spanish IBEX 35 (ES35) added 0.06%, and British FTSE 100 (UK100) closed negative by 0.11%.

The European currency retreated from its best levels amid dovish comments from ECB Governing Council representative and Bundesbank President Nagel, who said a pause could be an option for the ECB at its next policy meeting later this month.

WTI crude oil and gasoline prices fell sharply on Wednesday amid early signs that the war between Israel and Hamas will have a limited impact on oil flows in the Middle East. In addition, Wednesday’s US producer price index report came in stronger than expected, reinforcing speculation that the Federal Reserve will hold interest rates longer, which could dampen economic growth and energy demand.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) increased by 0.60%, China’s FTSE China A50 (CHA50) gained 0.37%, Hong Kong’s Hang Seng (HK50) added 1.29% and Australia’s ASX 200 (AU200) ended the day positive by 0.68%.

Hong Kong’s Hang Seng Index jumped by 1.8% on Thursday thanks to a 3% rise in banking stocks after China’s state fund Central Huijin Investment increased stakes in four major banks.

Japan’s September machine tool orders fell by 11.2% y/y, the ninth consecutive decline.

S&P 500 (F)(US500) 4,376.95 +18.71 (+0.43%)

Dow Jones (US30) 33,804.87 +65.57 (+0.19%)

DAX (DE40)  15,460.01 +36.49 (+0.24%)

FTSE 100 (UK100) 7,620.03 −8.18 (−0.11%)

USD Index  105.73 −0.10 (−0.09%)

• – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
• – UK GDP (m/m) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
• – UK Trade Balance (m/m) at 09:00 (GMT+3);
• – Eurozone ECB Monetary Meeting Accounts at 14:30 (GMT+3);
• – US Consumer Price Index (m/m) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 18:00 (GMT+3);
• – US FOMC Member Bostic Speaks at 20:00 (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.