InvestMacro

By JustMarkets

At the closing of the stock market on Friday, Dow Jones (US30) gained 0.09% (+3.99% for the week), and S&P 500 (US500) added 0.92% (+5.61% for the week). Technology Index NASDAQ (US100) increased by 1.88% on Friday (+7.67% for the week). However, despite the indices’ growth, analysts keep decreasing the forecasts of the US companies’ financial results and now expect negative growth of the “blue chips” total earnings in the 4th quarter. So far, 91% of the S&P 500 companies have already reported. 69% reported higher-than-expected actual earnings per share, below the average of 77%.

The US Federal Reserve may consider slowing the rate hikes at its next meeting. Still, Federal Reserve Chairman Christopher Waller said Sunday that it should not be seen as “easing” its commitment to lower inflation. According to analysts, markets should now pay attention to the end point of rate hikes rather than the pace of each move.

The midterm elections in the US indicate that the Democrats retain control of the Senate. They now have 50 seats against 49 for Republicans. Democratic leaders in Congress on Sunday promised to tackle the national debt ceiling in the coming weeks, saying their party’s election victory gives them leverage. The US House Speaker Nancy Pelosi and US Senate Majority Leader Chuck Schumer said they would act as long as Democrats control both houses.

Stock markets in Europe traded mixed last week. German DAX (DE30) gained 0.56% (+6.17% for the week), French CAC 40 (FR40) added 0.58% (+3.37% for the week), Spanish IBEX 35 (ES35) decreased by 0.43% (+2.34% for the week), British FTSE 100 (UK100) closed on Friday down by 0.78% (-0.23% for the week).

Germany’s inflation rate rose from 10% to 10.4% year-over-year, the highest since Germany’s reunification. Huge increases in energy prices continue to be the main cause of high inflation. In addition to rising prices for all types of energy due to the war in Ukraine and the energy crisis in Europe, supply disruptions and significant price increases in the preceding stages of the economic process are also affecting the inflation rate.

UK GDP fell sharply by 0.6% in the third quarter (with expectations of -0.1%). Analysts predict that this is the beginning of a recession for the UK and expect GDP to fall 2% by summer. However, much depends on how the government’s energy support develops during this period. As winter approaches, analysts expect more problems in manufacturing, construction, and industrial issues. But much will depend on Thursday’s budget announcement this week.

The EU Commission predicts that Eurozone quarterly GDP will contract in the fourth quarter of 2022 and the first quarter of 2023. As for consumer prices, the European Commission believes that inflation in the Eurozone will begin to decline next year, reaching an annualized rate of 7.0%.

Oil prices rose nearly 1% on Monday, continuing Friday’s gains as China eased some of its strict COVID-19 restrictions, raising hopes for a rebound in economic activity and demand from the world’s largest oil importer.

Asian markets mostly rose last week. Japan’s Nikkei 225 (JP225) gained 3.25% over the week, Hong Kong’s Hang Seng (HK50) jumped by 8.07%, and Australia’s S&P/ASX 200 (AU200) was up by 3.85%.

Annual Core Consumer Inflation surpassed the Bank of Japan’s target of 2% for the sixth straight month as the weak yen, partly driven by the central bank’s low-interest rate policy, pushed up import prices and household living costs. Bank of Japan Governor Haruhiko Kuroda has repeatedly said that the central bank should refrain from adjusting the YCC until its 2% inflation target is sustainably achieved and accompanied by wage increases. According to a key government commission spokesman, the Bank of Japan should steer a course toward policy normalization over the long term.

In the commodities market, futures on palladium (+11.28%), cocoa (+9.38%), platinum (+8.66%), copper (+6.77%), gold (+5.82%), silver (+4.86%), and sugar (+4.7%) showed the biggest gains by the end of the week. Futures on natural gas (-7.78%), orange juice (-5.42%), WTI oil (-4.05%), wheat (-4.01%), coffee (-3.98%), gasoline (-3.86%), corn (-3.45%), and Brent oil (-2.85%) showed the biggest drop.

S&P 500 (F) (US500) 3,992.93 +36.56 (+0.92%)

Dow Jones (US30) 33,747.86 +32.49 (+0.096%)

DAX (DE40) 14,224.86 +78.77 (+0.56%)

FTSE 100 (UK100) 7,318.04 −57.30 (−0.78%)

USD Index 106.42 −1.79 (−1.65%)

• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – Switzerland SNB Chairman Thomas Jordan speaks at 18:30 (GMT+2);
• – US FOMC Member Brainard Speaks at 18:30 (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

The US stock indices skyrocketed yesterday thanks to a long-awaited US inflation slowdown. The US Consumer Price Index fell from 8.2% to 7.9% year-over-year (8.0% expected). Core inflation, which excludes food and energy, also declined from 6.6% to 6.3% (6.5% expected). The decline in inflation indicates that the peak of inflation is likely to be over, which means the US Fed can reduce the pace of interest rate hikes so as not to put additional pressure on the economy. The probability of a 0.5% rate hike in December rose to 81% (vs. 56% the day before). As the stock market closed, the Dow Jones Index (US30) increased by 3.70%, and the S&P 500 Index (US500) jumped by 5.54%. The Technology Index NASDAQ (US100) was up yesterday by a record increase of 7.35% in 1 day. Near the end of this difficult year, investors are starting to see the light at the end of the tunnel and a chance for a moderate pre-New Year’s rally.

Given the prospect of a less hawkish Fed decision, Treasury yields have fallen sharply, and 2-year Treasury yields, sensitive to Fed policy, have fallen to a two-week low, helping big tech companies grow.

“The easing of core inflation in the October report is welcome news for the Fed,” Morgan Stanley said in a note. But the bank warned that optimism about slowing inflation could be dispelled if incoming data show that labor markets remain tight.

Equity markets in Europe also rose yesterday. German DAX (DE30) gained 3.51%, French CAC 40 (FR40) increased by 1.96%, Spanish IBEX 35 (ES35) added 1.15%, and British FTSE 100 (UK100) closed yesterday with a 1.08% gain.

Joachim Nagel of the European Central Bank (ECB) Governing Council said on Thursday that the ECB still needs to act decisively to fight inflation, which requires additional interest rate increases. The politician also noted that monetary policy has a time lag, so it takes time for rates to work to their full potential. Today, analysts’ attention is focused on German inflation data.

There was a broad rally in commodities markets Thursday as the dollar index fell sharply, posting its biggest daily drop in 11 years. But the oil market reacted more or less calmly. The relatively modest rise in oil was triggered by continuing news of a rise in the incidence of Covid in China. New cases of the coronavirus have broken out in the export capital of China’s Guangdong province, raising fears that the severe restrictions imposed in Shanghai earlier this year may be in the area. For the oil market, the damage from China’s lockdowns far outweighed the benefits of any Fed rate easing. But after news of the lifting of restrictions in Hong Kong, oil prices have been showing gains since the market opened.

The price of gold rose to its highest level in 3 months. Gold is inversely correlated to the dollar index and US government bond yields, so a sharp decline in the dollar index contributed to the rise in precious metal prices.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.98%, Hong Kong’s Hang Seng (HK50) ended down by 1.70%, while Australia’s S&P/ASX 200 (AU200) fell by 0.50%. But Asian stocks opened sharply higher on Friday as the Hong Kong government eased some restrictions related to COVID, encouraging optimism for a broader lifting of restrictions. Hong Kong’s Hang Seng (HK50) is already up more than 6% from the market opening. Analysts at Goldman Sachs predict that Chinese stocks could rise 20% when the country eventually waives COVID-19 and that it could do so by mid-2023.

S&P 500 (F) (US500) 3,956.37 +207.80 (+5.54%)

Dow Jones (US30) 33,715.37 +1,201.43 (+3.70%)

DAX (DE40) 14,146.09 +479.77 (+3.51%)

FTSE 100 (UK100) 7,375.34 +79.09 (+1.08%)

USD Index 107.93 -2.64 (-2.39%)

• – UK GDP (q/q) at 09:00 (GMT+2);
• – UK Industrial Production (m/m) at 09:00 (GMT+2);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+2);
• – Eurozone German Consumer Price Index (m/m) at 09:00 (GMT+2);
• – Eurozone Economic Forecasts (m/m) at 12:00 (GMT+2);
• – Switzerland SNB Chairman Jordan speaks at 14:45 (GMT+2);
• – US Michigan Consumer Sentiment (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 ForexTime 

First, let’s recap the volatile week that was for global financial markets!

Here’s the stunning price action that ensued after the lower-than-expected US inflation print that was released yesterday (Thursday, Nov 10th):

• DXY, the benchmark used to measure the US dollar’s performance against six major G10 currencies, saw its biggest single-day drop since December 2015!
• The S&P 500 posted its best one-day surge since the onset of the Covid-19 pandemic, while also registering its best CPI day advance since 2008!
• Gold is on course for its largest one-week gain since July 2020 (unless the precious metal can keep on climbing today to register a weekly gain of more than 5.06%)

And even before the dust has fully settled from yesterday’s major moves, it’s already time we look ahead to next week, given the forward-looking nature of the markets.

The British Pound is set to be in particular focus amidst these potential market-moving economic data releases and events:

Monday, November 14

• EUR: Eurozone September industrial production; speeches by ECB’s Fabio Panetta, Luis de Guindos
• USD: Speech by New York Fed President John Williams

Tuesday, November 15

• JPY: Japan Q3 GDP
• AUD: Reserve Bank of Australia November meeting minutes
• CNH: China October industrial production, retail sales, jobless rate
• EUR: Eurozone September trade balance, Q3 GDP and employment, November ZEW survey
• GBP: UK September unemployment, October jobless claims
• Brent: International Energy Agency releases monthly oil market report
• Former US President Donald Trump to make announcement
• Walmart 3Q earnings

Wednesday, November 16

• CNH: China October new home prices
• EUR: Speeches by ECB’s Christine Lagarde and Fabio Panetta
• GBP: UK October CPI, BOE Governor Andrew Bailey speech
• CAD: Canada October CPI
• USD: US October retail sales, industrial production; speeches by New York Fed President John Williams and Fed Vice Chair Lael Brainard
• US crude: EIA weekly oil inventory report

Thursday, November 17

• JPY: Japan October external trade
• AUD: Australia October unemployment
• EUR: Eurozone October CPI (final)
• GBP: UK Chancellor of the Exchequer Jeremy Hunt presents fiscal statement; speech by BOE’s Huw Pill and Silvana Tenreyro
• USD: US weekly initial jobless claims; speeches by Minneapolis Fed President Neel Kashkari, Fed Governor Philip Jefferson, Cleveland Fed President Loretta Mester
• Alibaba 3Q results

Friday, November 18

• JPY: Japan October CPI
• EUR: Speeches by ECB’s Christine Lagarde, Joachim Nagel, Klass Knot
• GBP: Speeches by BOE’s Catherine Mann and Jonathan Haskel
• USD: Speech by Boston Fed President Susan Collins

GBPUSD is about to head into this weekend on a 2-month high, having surged back above its 100-day simple moving average (SMA), thanks to the US dollar’s post-CPI tumble.

This currency pair, nicknamed “cable”, is now testing the mid-September high around 1.173, after building upon a series of higher-lows and higher-highs since careening towards parity.

Sterling’s resurgence of late has also been built on the optimism that the UK government will be on a better financial footing (or at least, it won’t be as bad as previously feared) under the new administration, following the removal of Liz Truss as Prime Minister along with her administration’s proposals for unfunded tax cuts.

However, such optimism would have to be vindicated when current UK Chancellor of the Exchequer, Jeremy Hunt, unveils the latest fiscal plans on Thursday.

Keep in mind that the UK government has a GBP 50 billion fiscal hole to fill.

Markets now expect Hunt to unveil some tax hikes as well as spending cuts, including a potential spending freeze after the UK’s next general election which may happen sometime in 2024.

In other words, this new UK government has to find ways to get more money into its coffers and avoid spending too much money, in order to shore up market confidence about the country’s financial health.

With this UK government’s credibility at stake, failure to shore up market confidence could see GBPUSD finding its way back to its 50-day SMA for support around the 1.133 region.

And of course, markets are still wary about the UK’s economic prospects, with the Bank of England just last week implying that the economy is currently in a recession and may continue contracting until mid-2024.

Against such a bleak outlook, the UK incoming jobs report and inflation data may offer scant relief. That should leave Hunt’s November 17th speech as the major catalyst for further GBPUSD gains, besides further declines in the US dollar.

At the time of writing, here are some forecasts for GBPUSD’s performance for the coming week (based on current levels):

• 59% chance of GBPUSD of revisiting 1.1599
• 47.6% chance of GBPUSD climbing by 2 big numbers from current levels to hit 1.19
• 33% chance of GBPUSD touching the early-October cycle high just below 1.1496
• 23.7% chance of GBPUSD staying above 1.190 over the next one week

Though to be fair, the options markets have become notably less bearish on GBPUSD’s immediate fortunes, with bearish one-week bets having halved since the start of November.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

By Gemma Ware, The Conversation and Daniel Merino, The Conversation 

Indonesia plans to move its capital city from Jakarta on the island of Java to a new forest city on the island of Borneo called Nusantara. In this episode of The Conversation Weekly podcast, we talk to three experts in urban planning and ecology to find out why – and what the environmental impacts of the project could be.

Jakarta is a city struggling to keep its head above water. “It’s been attacked from both sides – from the river and from the land,” says Eka Permanasari, associate professor in urban design at Monash University, Australia.

The city experiences extreme amounts of rainfall, worsened by climate change, which regularly causes severe flooding. Coupled with this, massive extraction of ground water from aquifers underneath the city is causing the Jakarta to sink. “If you go to the northern part of Jakarta, you may see the road is higher than the houses next to it. In some other areas, it’s actually sinking more than 15cm per year,” says Permanasari.

Due to the problems facing Jakarta, plans to relocate Indonesia’s capital have a long history. During the colonial era, the Dutch considered abandoning the city, then called Batavia, due to flooding, high temperatures and disease linked to stagnant water. Since Indonesian independence in 1945, successive administrations have also floated plans to relocate the capital, but these never came to fruition.

Now, the government of President Joko Widodo, known as Jokowi, is forging ahead with a new project, estimated to cost around US$35 billion. In January, Indonesia’s parliament passed a bill to relocate the country’s capital city from Jakarta on the island of Java to the East Kalimantan province of Borneo. The government then announced the city’s name: Nusantara, which loosely translates as archipelago in sanskrit.

Hendricus Andy Simamarta is a lecturer in urban planning at the University of Indonesia and president of the Indonesian Association of Urban and Regional Planners. He says a big reason for relocating the capital is to shift Indonesia’s centre of gravity away from Java. “We are very dependent on Java economically, more than 50% of our economy is located in Java,” he says. Simamarta is sceptical that moving the capital to East Kalimantan will re-balance the economy, but he says at least it can start to “re-orientate our mindset of development”.

The dream for Nusantara is for a new high-tech, smart city, surrounded by forest. Borneo is an island with rainforests home to an abundance of different species, including orangutan and Asian elephants. However, Alex Lechner, an associate professor in landscape ecology at Monash University, Indonesia, who is based in Jakarta, says the area planned for Nusantara’s construction is currently covered by eucalyptus plantations – monocultures with less biodiversity than intact rainforest.

Lechner is impressed with eight principles set out for Nusantara’s development, including on carbon neutrality and circular economy approaches. “If it all looks like it’s looking like on paper, there’s potential for this city to be this shining example for southeast Asia of what green and sustainable development should look like,” he says.

But he’s also concerned about what might happen on Borneo outside Nusantara’s footprint. “What happens to all the development which this city encourages outside of the city boundaries? Is this going to be developed sustainably?” Lechner says if more roads are built to connect Nusantara to other parts of Borneo, this could produce a “fish-bone effect” with small roads leading off into the forest, which could have a “whole raft of cascading spillover effects on the environment and especially on diversity”.

Listen to the full episode to hear more about the challenges facing Jakarta and the plans – and politics – behind Nusantara.

This episode of The Conversation Weekly was produced by Mend Mariwany and Gemma Ware, with sound design by Eloise Stevens. Our theme music is by Neeta Sarl. You can find us on Twitter @TC_Audio, on Instagram at theconversationdotcom or via email. You can also sign up to The Conversation’s free daily email here.

Newsclips in this episode are from CNA News, Aljazeera English, France24 , The Jakarta Post, Media dan Informasi Sekretariat Presiden.
You can watch a video showing a digital rendering of the presidential palace, designed by the artist Nyoman Nuarta, here.

You can listen to The Conversation Weekly via any of the apps listed above, download it directly via our RSS feed, or find out how else to listen here.

Gemma Ware, Editor and Co-Host, The Conversation Weekly Podcast, The Conversation and Daniel Merino, Assistant Science Editor & Co-Host of The Conversation Weekly Podcast, The Conversation

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