China Is Once Again Experiencing A Decline In Business Activity

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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%)

News feed for 2023.11.30:

  • 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).

More By This Author:

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Disclosure: 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, ...

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