Economy Spotlight : The Most Important Events and What's Coming 11-17/11/2024

Introduction:

In this week's ‘’ Economy Spotlight ‘’ report, we will discuss the most important economic data and indicators, and the events that have greatly affected various markets, specifically those that occurred in major economies.

The US elections were the most anticipated event for the markets, which came contrary to expectations that the results would be delayed, to greatly affect market sentiment, specifically in stocks and gold.

Also, As for China, it had a very important meeting of the Standing Committee of the National People's Congress of China between November 4 and 8, which addressed many issues related to stimulating the second largest economy in the world, especially with Donald Trump assuming the US presidency for the next four years.

We will also discuss the decisions of the most prominent central banks that made their decisions this week, most notably the US Federal Reserve's penultimate meeting of the year.

Economy Spotlight. Main economies:

First. The US economy:

The US economy headed into the US elections and the Federal Reserve meeting last week with great anticipation, after shocking data on the labor market, which was described as vague and unclear.

Several important economic data were released before the elections, the most prominent of which were:

- The trade deficit rose to its highest level in about two and a half years, recording 84.4 billion US dollars, driven by an increase in imports by US companies due to their fears of potential tariffs that Republican candidate and current US President Donald Trump had threatened.

- The reading of the service purchasing managers index declined slightly, recording 55 points.

- The non-manufacturing purchasing managers index issued by the Institute for Supply Management rose to 56, the highest level in about two years.

As for the aviation sector, which analysts had pointed to as one of the reasons for the unrealistic decline in job reports in the US labor market, Boeing has finally reached an agreement with its workers and ended their unrest that lasted for about six weeks.

The two most prominent events in terms of impact on the financial markets were the US elections and the interest rate decision by the US Federal Reserve.

As for the elections, the victory of Republican candidate Donald Trump in the presidency for the second time was directly reflected in the markets on the day the results were announced.

Stock markets rose, driven by corporate optimism about the tax cuts that Trump promised in his election campaign, and the protectionist conditions that he will implement against products manufactured outside America.

Gold fell by about 3%, losing more than $80 in the session following the US results, while the US dollar index rose by 1.37%.

Analysts interpreted this as fears of the policy that Trump might adopt towards trade, by increasing tariffs on foreign goods, especially Chinese goods, in a way that could lead to inflation remaining high and thus holding on to interest rates at higher levels.

In terms of interest rates, the US Federal Reserve cut interest rates by a quarter of a percentage point, as expected, to 4.75%, while keeping the door open for future cuts based on economic data, with the Fed Chairman stressing that the economic decision will be far from any political influences.

As for US companies, the most prominent news was as follows:

• Nvidia entered the Dow Jones Industrial Average as a component, displacing Intel, which had been a component of the index since 1999.
• Tesla's value rose to exceed one trillion US dollars.

Second. European Economy:

The European side issued many economic indicators, including:

- Stability of unemployment rates in Switzerland.

- The Eurozone producer price index declined to the negative range.

- Stability of inflation rates in Sweden on an annual and monthly basis.

As for the decisions related to interest rates by the main European central banks, they came as follows:

- The Swedish Central Bank reduced interest rates by half a point to reach 2.75%, based on the reassurance of decision-makers that inflation is now relatively under control.

- The British Central Bank (Bank of England) reduced interest rates by a quarter of a percentage point to reach 4.75%, in line with expectations.

Third. The Japanese Economy:

As for the Japanese economy, the Governor of the Bank of Japan came out and spoke about his hopes regarding the stability of inflation and its decline to the required levels of 2%.

Also, He stressed that the Japanese central bank will continue to monitor the data very carefully, noting that it will take into consideration what may be spent on climate change, specifically the issue of taxes that may be imposed soon, or support equal to 3% of the size of the Japanese economy for companies that adhere to environmental standards, in a way that may lead to raising price levels.

As for the Japanese yen, it was one of the directly affected by the outcome of the US elections, as the Japanese yen fell by nearly 2% driven by the recovery of the US dollar.

The Japanese currency approached the 155 yen barrier to the dollar, far away from the 140 yen levels that it had recorded against the dollar last September.

At these levels, analysts indicated that the Japanese central bank may be forced to raise interest rates at its next meeting in December of this year, in order to prevent the yen from slipping back to the 160 yen levels that it had recorded against the dollar last July.

Fourth. China's economy:

China is still living in the shadow of hopes that the government will stimulate its economy with large and serious packages, and the Standing Committee of the National People's Congress held a major meeting between November 4 and 8.

The committee confirmed a package worth 10 trillion yuan ($1.4 trillion) to ease the hidden debt burden of local governments, rather than direct injections of money as investors had hoped.

Fifth. Commodities and precious metals:

Gold lost about 2% of its value last week, falling from $2,736 to $2,684, after losing 3% after Trump's election victory was announced, losing about $83 that day.

However, gold recovered some of its losses due to the interest rate cut on the dollar that took place a day after the US election results were announced.

Silver also lost more than 3.5% of its value, closing at $31.

Economy Spotlight. What to expect next week:

Global markets will be waiting for the following economic data:

Tuesday, November 12, 2024:

Sweden:

- Unemployment rate.

UK:

- Unemployment rate.

EUR:

- ZEW Economic Sentiment Survey.

USA:

- OPEC Monthly Report.

- Important speeches by Fed members (Waller, Barkin, and Kashkari)

Wednesday, November 13, 2024:

USA:

- Important speeches by Fed members (Barkin, Harker).

- Inflation rate, with expectations of stabilizing on an annual basis at 2.4%, and on a monthly basis at 0.2%.

Euro:

- Non-monetary policy meeting of the European Central Bank.

Thursday, November 14, 2024:

Sweden:

- Inflation rate represented by the Consumer Price Index, with expectations of stabilizing on an annual basis at 1.6%.

Euro:

- Quarterly GDP with expectations of stabilizing at 0.9%.

United States of America:

- Producer Price Index.

- Repercussions of continued unemployment.

- Unemployment claims rates.

- Speech by the Federal Reserve Chairman.

- Monthly report of the International Energy Agency.

Friday, November 15:

Japan:

- GDP with expectations of declining from 0.7% to 0.2%.

China:

- Retail Sales.

- Unemployment Rate.

- ONS Press Conference.

UK:

- Quarterly and Monthly GDP.

- Industrial Production Index.

USA:

- Retail Sales.