Economy Spotlight: The Most Important Events and What's Coming 25-30/11/2024

Introduction:

In this week's " Economy Spotlight " report, we cover many details related to the most important events in the major economies, whether in terms of developments in general economic indicators and financial data for some giant and important companies, or in terms of the various impacts that cast their shadows on the performance of various markets.

Also, our report reviews the most prominent statements issued by important figures in the world of economics and finance, especially considering the clear impact on the markets from the statements of the US Federal Reserve Chairman, in which he indicated the need not to rush to reduce interest rates.

Economy Spotlight. Major economies:

First. The US economy:

Despite the disappointing start of the US stock markets considering the statements of the US Federal Reserve Chairman in which he indicated the need not to rush into interest rate cuts, the performance of the markets on a weekly basis was recording an increase compared to the previous week.

The three main financial market indices rose by an average of around 2%, supported by the latest economic data issued by the US side.

The business activity index was issued, which rose to its highest level in 31 months in November, supported by two things, according to analysts’ opinions:

• The start of interest rate cuts, although they will be accompanied by some slowdown.

• Optimism about the policies of US President Donald Trump and his policy that is suitable for the business environment of companies.

The improvement was not limited to the main indicators of the US stock markets, but the improvement extended to the dollar index by about 1%, closing at 107.49, the highest level for the dollar index since November 2022.

Analysts interpreted this noticeable improvement in the dollar index because of inflation data that returned to rise, whether in terms of the consumer price index or the producer price index.

Although last week can be described as a quiet week in terms of economic data, there were important economic data issued, as follows:

- Statements by prominent members of the Federal Reserve (Schmid, Bowman, Cook), in which they indicated the need not to rush to reduce interest rates and stressed the need to monitor upcoming economic data very carefully.

- Unemployment complaints rates, which came contrary to expectations, recording a decline that is the lowest in seven months.

- Business activity indicators (manufacturing PMI, services PMI), recording their highest levels in 31 months, which is positive for both financial markets and the dollar.

The most prominent event that was under observation last week was related to the technology company Nvidia (the largest company in the world), which, despite achieving higher-than-expected revenues and earnings per share, the company's difficult expectations for next quarter's sales were disappointing to the market, which led the company's stock to close at $142 after touching $150 at one point during the past week.

Second: The European economy:

The European economy is still in a state of economic uncertainty, especially considering the semi-annual report issued by the European Central Bank on financial stability.

The central bank said in the report that increasing global trade tensions continue to pose a risk to the eurozone economy, and that weak growth has become a greater threat than rising inflation rates in the 20-nation eurozone.

The latest figures indicated that economic growth in the eurozone reached its highest level in two years at 0.4% in the third quarter, while the core inflation rate reached 2% in October.

However, the European Central Bank policymaker Joachim Nagel eased concerns about tariffs on European inflation.

Nagel said:

"Tariffs would turn international trade upside down, but they may ultimately have a 'minimal impact' on inflation."

Some news reported on the pages of Reuters indicated that the European Union and China are approaching an agreement on tariffs on electric car imports, according to a prominent member of the European Parliament.

Nagel's talk and the news reported on Reuters' pages were the most prominent positive news about the European economy last week.

However, low sentiment still looms over the performance of the euro, which fell by 1.18% last week, recording $1.041 per euro, the lowest performance of the European currency since December 2022.

As for the European economic indicators for the past week, the most important of them were as follows:

- The trade balance improved for September by more than expected.

- The inflation index stabilized at 2% on an annual basis.

- Consumer confidence declined in November.

Thirdly, UK economy:

The UK economy was on a date with some of the most important economic indicators, especially the inflation index, which recorded increases at various levels.

It rose monthly excluding food and energy, and on an annual basis for October from 1.7% to higher than expected, recording 2.3%.

In addition to other vague economic indicators related to retail sales, the pound sterling fell against the dollar by 1.22%, closing at $1.25 per pound.

Fourth. The Japanese Economy:

The Japanese economy was on a date with a press conference by the Japanese Central Bank, in which officials said that keeping real interest rates adjusted for inflation low for a long period of time could cause hyperinflation, which would force the bank to raise interest rates.

However, the bank did not explicitly speak about any evidence of the next increase in interest rates, which the markets considered disappointing, which was reflected in the performance of the Japanese yen, which closed at 154.707 yen per dollar, after it had approached 156 yen per dollar at some point during the past week.

Fourth. The Chinese Economy:

All eyes are still on China, and everything related to its economic indicators, and news about any upcoming stimulus measures that may be issued by the Chinese side to stimulate the second largest economy in the world.

Also, analyses continue to point to the economic policies of the incoming US President Donald Trump, and the extent of their impact on the Chinese economy.

A Reuters poll indicated that the United States may impose tariffs of about 40% on imports from China in early 2025, which will reduce China's economic growth by about 1%.

Some news was issued regarding the giant technology company "Huawei", which some news indicated that it aims to mass-produce the latest artificial intelligence chip in early 2025, despite US restrictions.

The news related to interest rates last week remained the most important from the Chinese side, as the People's Bank of China "the Chinese central bank" did not change the main lending rate.

The bank's basic interest rate on one-year loans remained at 3.1% and the interest rate on loans for more than five years at 3.6%.

Economy Spotlight. What to expect next week:

Global markets will be awaiting the following economic data:

Tuesday, November 26, 2024

United States:

• Consumer Confidence Index.

• New Home Sales.

• FOMC Meeting Minutes.

Japan:

• Bank of Japan Core CPI, expected to rise slightly.

Wednesday, November 27, 2024:

China:

• Chinese Industrial Profit YTD.

Europe:

• ECB Non-Monetary Policy Meeting

United States:

• Revised GDP for Q3 2024.

• Continued Unemployment Implications.

• Unemployment Claims Rate.

• Core Personal Consumption Expenditure Price Index.

• FOMC Meeting Minutes.

• Crude Oil Inventories.

Thursday, November 28, 2024:

United States:

• Thanksgiving Holiday.

Friday, November 29, 2024:

Japan:

• Tokyo Consumer Price Index.

• Unemployment Rate.

• Industrial production.

UK:

• Bank of England Financial Stability Report.

• Bank of England Monetary Policy Committee Meeting Minutes

Sweden:

• Q3 GDP.

Switzerland:

• Q3 GDP.

Europe:

• Inflation (CPI).

Canada:

• Q3 GDP.

• Government Budget.

Saturday, November 30, 2024:

China:

• China Composite PMI

• Manufacturing PMI (November)

• Non-Manufacturing PMI (November).