Is it a fair weather market?

Corporate Earnings News
Global market indices
Currencies
Cryptocurrencies
Fixed Income
Commodity sector news
Key data to move markets this week
Global macro updates

Corporate Earnings News

Corporate earning calendar 16 November - 22 November 2023

Thursday: Alibaba Group Holdings, Applied Materials, Walmart, Ross Stores, Lenovo Group
Friday: Spectrum Brands, Buckle, PrimeEnergy, Compass Minerals
Monday: Zoom Video Communications, Compass Group, Agilent Technologies, Keysight Technologies
Tuesday: Baidu, Medtronic, HP, Nvidia, Lowe's Companies, Analog Devices, Autodesk, Best Buy
Wednesday: Deere & Co., The Sage Group

US Stock Indices

Nasdaq 100 +9.80% MTD and +44.63% YTD
Dow Jones Industrial Average +5.37% MTD and +5.07% YTD
NYSE +5.67% MTD and +3.82% YTD
S&P 500 +5.19% MTD and +14.90% YTD

US stocks extended their recent gains this week as lower inflation data and falling producer prices in the US reinforcing investor expectations that the Fed is done raising rates.

Mega caps: A relatively good week for the “magnificent seven” mega caps as falling US inflation and a firmer belief that rates have peaked encouraged investors. Apple, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla are all up this week.

Energy stocks had a bit of a volatile week this week on reports by the IEA and OPEC forecasting bullish future demand and as US supplies hit a three-month high. The IEA raised its forecast for crude oil demand growth in 2023 by 100,000 barrels per day (bpd) to 2.4 million bpd. OPEC raised its 2023 demand forecast to 2.46 million bpd, up 20,000 bpd from its forecast in October. Much of the demand growth is expected to come from China, which has been stockpiling supplies over the past ten months. Occidental Petroleum, Apa Corp (US), ConocoPhillips, Shell, Chevron, Halliburton, ExxonMobil, Baker Hughes, Marathon Petroleum, Phillips 66, and Energy Fuels are all up this week.

Materials and Mining stocks had a generally fair week as a softer dollar and lower copper inventories helped lift prices although there are growing concerns about demand in China. Yara International, Sibanye Stillwater, Nucor Corporation, Freeport-McMoRan, Newmont Mining, Albemarle Corporation, CF Industries Holdings, and Mosaic are all up on the week.

European Stock Indices

Stoxx 600 +4.81% MTD and +6.97% YTD
DAX +6.33% MTD and +13.10% YTD
CAC 40 +4.70% MTD and +11.37% YTD
IBEX 35 +6.91% MTD and +17.15% YTD
FTSE MIB +6.22% MTD and +22.30% YTD
FTSE 100 +2.26% MTD and +0.47% YTD

Other Global Stock Indices 

MSCI World Index +6.80% MTD and +12.31% YTD
Hang Seng +5.65% MTD and -8.61% YTD

Currencies

The US dollar fell over the past week after lower than expected CPI data, at 3.2%, on Tuesday, but was boosted on Wednesday after still strong US retail sales data indicated that rate cuts will still likely be a far way off. The GBP is +2.18% MTD and +2.68% YTD against the USD. Sterling fell on Wednesday as the drop in inflation to 4.6% in the 12 months to October, its lowest reading in two years, helped it reverse part of Tuesday's surge against the US dollar. The EUR is +2.58% MTD and +1.37% YTD against the USD. The eurozone economy is weakening, with a 0.1% contraction in GDP in the third quarter of the year confirmed.

Cryptocurrencies

Bitcoin +8.70% MTD and +127.20% YTD
Ethereum +12.80% MTD and +70.94% YTD

Bitcoin continued its rise this week as expectations of fresh demand for the token from exchange-traded funds continued to rise. Ethereum is also seeing a rise as BlackRock, the world’s largest asset manager, has filed with the SEC to list an exchange-traded fund. The recovery in crypto valuations may continue if investors think real interest rates have peaked and that there is progress towards spot ETF approvals by the SEC.

Fixed Income

US 10-year yield to 4.53%.
German 10-year yield to 2.64%.
UK 10-year yield to 4.22%.

US benchmark 10-year yields managed to gain some ground on Wednesday after falling on Tuesday’s lower than expected CPI. Eurobonds have continued their downward trend driven by market expectations that the ECB is done tightening. There is likely to be a bigger divergence between European yields and US yields looking forward because of the differences in the economic performance of the Eurozone vs the US. However, in the UK, although UK yields fell on lower inflation data, BoE policy makers such as Megan Greene have noted that rates will stay higher for longer, as, she said earlier today, that “there are reasons to think that the economy may be structurally a little bit different.” She noted that wage growth was still very high and that the natural rate of interest and unemployment has risen since the pandemic.

Commodities

Gold futures to $1,963.30 an ounce.
Silver futures to $23.54 per ounce.
West Texas Intermediate crude to $76.66 a barrel.
Brent crude to $81.06 a barrel.

Gold steadied below one-week highs on Wednesday, weighed by a stronger dollar, but expectations that the Fed is done with hiking interest rates seems to have put a floor under prices. As long as investors think inflation will continue to fall, yields will also likely fall, thereby making gold more attractive.

Note: As of 5 pm EST 15 November 2023

Key data to move markets this week

EUROPE

Thursday: Speeches by ECB President Christine Lagarde and ECB Vice President Luis De Guindos.
Friday: A speech by ECB President Christine Lagarde and Eurozone Harmonised Index of Consumer Prices.
Monday: German PPI and German Bundesbank Monthly Report.
Wednesday: EU Financial Stability Review, Eurozone Consumer Confidence.
Thursday: German Composite, Manufacturing, and Services PMIs, Eurozone Composite, Manufacturing, and Services PMIs, ECB Monetary Policy Meeting Accounts.

UK

Thursday: A speech by BoE Deputy Governor for Markets and Banking David Ramsden.
Friday: Retail Sales and a speech by BoE Deputy Governor David Ramsden.
Monday: A speech by BoE Governor Andrew Bailey.
Wednesday: BoE Monetary Policy Report Hearings.
Thursday: S&P Global/CIPS Composite, Manufacturing, and Services PMIs and Autumn Forecast Statement.

US

Thursday: Speeches by Fed Board of Governors members Lisa Cook and Christopher Waller, Cleveland Fed President Loretta Mester and New York Fed President John Williams, Initial Jobless Claims, Philadelphia Fed Manufacturing Survey, and Industrial Production.
Friday: Building Permits and Housing Starts.
Tuesday: Existing Home Sales Change and FOMC Minutes.
Wednesday: Durable Goods Orders, Nondefense Capital Goods Orders, Initial Jobless Claims, Michigan Consumer Sentiment Index, UoM 5-year Inflation Expectations.
Thursday: Markets closed for Thanksgiving holiday.

CHINA

Monday: People’s Bank of China (PBoC) Interest Rate Decision.

Global Macro Updates

UK inflation finally falls. UK inflation fell to 4.6% in October from 6.7% in September, official data showed on Wednesday. The increase was the smallest in two years and prompted investors to increase their bets on BoE rate cuts next year. The ONS said the fall in the annual CPI rate was the biggest from one month to the next since April 1992. Although inflation has more than halved from its October 2022 peak of 11.1%, the BoE has warned that inflation will only return to its 2% target in late 2025. 

Europe’s growth downgrade. The EU economy will grow less than previously forecast this year, the European Commission has said, as it unveiled fresh downgrades to its GDP expectations owing to high inflation and sluggish business activity weighing on the bloc’s markets. It forecast that the EU economy will grow 1.3% in 2024, down 0.1% than previously expected. It cut its growth forecast to only 0.6% for the Eurozone this year with potential headwinds coming from energy dependent economies such as Germany. The unemployment rate in the EU is expected to remain broadly stable at 6.0% in 2023 and in 2024. It noted that credit is continuing to tighten and that this will weigh on growth in 2024 and 2025. Although Economy Commissioner Paolo Gentiloni said that he is optimistic about the future, stating that private consumption is set to be the key growth driver, as wage increases should outpace inflation, lifting households' purchasing power.

Can the US consumer still save the day? US retail sales showed a smaller than expected decline of 0.1% on Wednesday. Additional data on Wednesday showed the biggest decline in producer prices in 3-1/2 years in October, down 0.5% month-on-month on the back of a 15.3% drop in gasoline prices, offering more evidence of easing price pressures and giving hope that the Fed will interpret these indicators as signs to end its tightening cycle. This followed Tuesday’s lower than expected CPI figures and helped raise the mood for investors. Further aiding the mood, both the US House of Representatives and the Senate passed a temporary spending bill to avert a government shutdown and sent it to President Joe Biden to sign into law before the midnight deadline on Friday. The passing of the emergency bill marked the end of this year's third fiscal standoff in Congress that has brought the US to the brink of defaulting on its more than $31 trillion in debt.

China’s property problem. China’s debt laden local governments are posing an increasing risk to China’s wider financial stability. Based on finance ministry data, revenue from government land sales fell 25.4% y/o/y in October, extending September’s 21.3% decline. Property sales by floor area fell 20.33% year-on-year against a 19.77% fall in September, according to Reuters calculations based on data released by the National Bureau of Statistics (NBS). This adds to the fiscal strains local governments are feeling as cash strapped property developers are struggling to repay debts and finish presold housing projects after Beijing tightened curbs on borrowing. According to a Nomura report, the size of unfinished, pre-sold homes in China is about 20 times the size of property developer Country Garden, which defaulted on a US dollar bond last month, as of the end of 2022. As noted by CNBC, the report’s analysts suggested that “At some point next year, the issue of home delivery could turn into a social issue and endanger social stability, and Beijing may eventually need to significantly ramp up policy support.” 

China’s mounting economic woes, with exports and domestic demand remaining sluggish, may be partly behind its recent push to calm relations with the US with US President Joe Biden and Xi Jinping holding a high-profile summit in San Francisco on Wednesday in a renewed attempt to stabilise US-China relations.

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