Economy Spotlight: The most important events and what is coming 02-08/12/2024

Introduction:

The potential tariffs indicated by President-elect Donald Trump, and news of US inflation, dominated various markets, which we will discuss in the " Economy Spotlight " report for this week.

We will also refer to much news related to major economies, and the most famous global companies, in addition to reviewing the most important things that the economic calendar holds for this week.

Economy Spotlight. Major Economies:

First. The US Economy:

The US economy began last week with news of the tariffs that Trump said he would impose on Mexico, Canada and China.

He indicated his intention to raise tariffs on Canada and Mexico to 25%, up from the current rate of between zero and 2.5%, in addition to imposing 10% as an additional fee on the current tariffs on China.

This news raised many concerns among analysts, who indicated that these steps are capable of harming global trade and hurting certain companies, especially car manufacturers and technology companies, especially those that have factories in Mexico.

Mexico responded through its president that it will respond to any customs tariffs in kind, while China responded through its Ministry of Commerce that these tariffs will be a threat to global trade.

As for economic data, the inflation indicator represented by the core personal consumption expenditures price index, where the numbers are still above the target rate by the US Federal Reserve, which maintained doubts about the Federal Reserve making further interest rate cuts during the upcoming meetings.

The US government also confirmed that the US economy had grown at a strong pace in the third quarter, amid strong consumer spending, as the GDP recorded levels of 2.8%.

As for the most important economic indicators issued by the US side last week, they were as follows:

• The consumer confidence index rose for the month of November by a very small percentage less than expected, as it rose from 109.6 to 111.7.

• New home sales fell to their lowest level since December 2023, to 610,000 housing units.

• The minutes of the Federal Reserve meeting were released, indicating that Federal Reserve members stressed the need to monitor economic data when making the decision to cut interest rates.

• Unemployment claims fell from 215,000 to 213,000 jobs.

Second. European Economy:

The European continent continued to talk about concerns about potential tariffs under US President-elect Donald Trump, in addition to concerns about geopolitical tensions that returned to the forefront early last week.

Goldman Sachs Bank predicted in a recent report that GDP growth would lag behind expectations, but it expected the region to enter a recession, supported by some European countries curbing their budgets and working to control their debts, such as Germany and France.

Concerns still surround the European economic giant, the "German economy", especially with the decline in some indicators, the most prominent of which was the Gfk Consumer Climate Index, which fell to -23.3 points, instead of falling to -18.6%, which indicates a deterioration in the mentality among consumers for December 2024, as private consumption in Germany provides half of the German GDP.

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

- The consumer confidence index fell to -13.7% from -12.5%.

- Inflation (CPI) rose from 2% to 2.3% as expected.

Third. The UK economy:

Goldman Sachs Research expects the UK economy to continue to grow in 2025, although its expansion may be slower than some economists expect.

Our economists expect the UK’s GDP to expand by 1.2% in 2025, slower than the Bank of England’s forecast of 1.5% and slightly below the 1.3% estimate of economists surveyed by Bloomberg.

The report concluded by noting that the UK economy will be affected by several key factors including uncertainty over trade arrangements with the US, a less expansionary budget, and proposed changes to the housing and development planning system.

As for the Bank of England’s Financial Stability Report, the bank warned that raising trade barriers could hurt global growth and fuel uncertainty about inflation, which could cause volatility in financial markets and raise borrowing costs for businesses and consumers.

Fourth. Japanese Economy:

The stimulus package of about a quarter of a trillion US dollars sought by the new Japanese government was the most prominent feature on the economic scene in Japan, which the government said aims to improve citizens' sense of well-being.

The government also confirmed in an extraordinary meeting last week that the country's economy is gradually recovering despite the decline in some areas, indicating that it feels a gradual recovery.

The Japanese economy has also witnessed many important economic indicators, which continue to confirm the extent of the challenges facing the Japanese Central Bank.

The most prominent of these indicators were:

• The Japanese current account deficit increased from $294 billion to $461 billion in October.

• Foreign investments in Japanese stocks declined to about $127.6 billion from about $514.2 billion.

• The inflation index, represented by the Tokyo Consumer Price Index, rose from 1.8% to 2.2%, noting that the national inflation index stands higher than expected at 2.3%.

• The unemployment rate rose from 2.4% to 2.5%.

• Industrial production rose from 1.6% to 3%.

Fifth. The Chinese economy:

The tariffs threatened by Trump, which we mentioned at the beginning of the current report, were the most important thing that received the attention of Chinese officials, who confirmed that they are tariffs that will cause losses for all parties on the trade level.

China warned that it will take the necessary measures to protect Chinese companies if America escalates its control measures on American chips.

As for the most prominent economic indicators issued last week by the Chinese side, they were represented by the manufacturing purchasing managers index (November), which held at levels above the good range, when it rose from 50.1 to 50.3.

Economy Spotlight. What to expect next week:

Global markets will be waiting for the following economic data:

Monday, December 2, 2024

United States:

• Manufacturing PMI (November), with expectations of an increase. (Positive for the dollar)

• Manufacturing PMI from the Institute for Supply Management, with expectations of an increase. (Positive for the dollar)

• Federal Reserve Board member Waller speech

Euro:

• Manufacturing PMI (November)

• Lagarde speech

• Unemployment rate.

China:

• Caixin Manufacturing PMI (November)

Tuesday, December 3, 2024:

United States:

• Job openings, with expectations of a slight increase. (Positive for the dollar).

Switzerland:

• Inflation (CPI)

Wednesday, December 4, 2024:

USA:

• ADP Non-Farm Employment Change, with expectations of a decrease (Negative for the dollar).

• Services PMI (November), expected to rise (USD positive).

• ISM Non-Manufacturing PMI, expected to fall (USD negative).

• Fed Chair Powell speech.

• Crude oil inventories.

Euro:

• Producer Price Index

Thursday, December 5, 2024:

USA:

• Unemployment Claims, expected to rise slightly (USD negative).

Sweden:

• Inflation rate.

Euro:

• Retail Sales

Friday, December 6, 2024:

USA:

• Average Hourly Earnings, expected to fall (USD negative).

• Nonfarm Payrolls (expected to rise significantly compared to last month's big drop), USD positive.

• Unemployment rate, expected to rise slightly to 4.2%.

• Michigan Inflation Expectations Index, expected to rise.

EUR:

• Q3 GDP.

Saturday, December 7, 2024

China:

• China's foreign exchange reserves (USD) (November)