Economy Spotlight : The Most Important Events and What's Coming 18-24/11/2024

Introduction:

This week's Economy Spotlight report covers several economic issues and files that have emerged in various major economies, most notably the United States, China, the European Union, and Japan over the past week.

The report also highlights the impact of both economic data related to inflation and statements issued by the Federal Reserve Chairman.

As for the most important dates that markets can expect this week, they are November 20, when Nvidia (the largest company in the world and the last of the amazing seven companies) will announce its results for the third quarter of 2025, with expectations that the company will see revenues exceeding $33 billion compared to about $30 billion achieved in the previous quarter.

Economy Spotlight. Main economies:

First. The US economy:

The US economy began its first week affected by the results of the US elections and the victory of Republican candidate Donald Trump in his second unconnected presidential term, which also coincided with his Republican Party winning a clear majority in the US Congress, as the US financial markets took off positively, specifically when the S&P 500 index opened at 6000 levels for the first time in its history.

As for gold, it was the opposite, falling by 4.5% on a weekly basis, and analysts explained this decline by two things:

- Economic data that showed a return to rising inflation for the first time in eight months, when inflation rose in March of this year.

- Fears that Trump's return will cause inflation to rise, which may lead to sticking to high interest rates, reflecting the hopes that have been fueling the rise in gold since the beginning of 2024, when expectations indicated that the Federal Reserve would cut interest rates this year and continue them until the end of 2025.

The US dollar index also reached its highest levels since 2023, recording 107 on November 14, driven by the same reasons specific to gold, to close the index at 106 levels and a weekly increase rate of 1.6%.

As for the most dangerous thing that happened last week, it was represented by the statements of the Federal Reserve Chairman and his emphasis on the need not to rush to reduce interest rates, especially with the labor market continuing to be strong, and inflation remaining at levels higher than the required level of 2%.

Very important economic data was issued during the past week, the most prominent of which were as follows:

- Inflation reading, represented by the Consumer Price Index, which was released in line with expectations, as it stabilized at its monthly levels, and rose on an annual basis from 2.4% to 2.6% for the first time in four months.

- Inflation reading, represented by the Producer Price Index, which rose again from 1.9% after the adjustment to 2.4% on an annual basis, and from 0.1% to 0.2% monthly.

- Labor market indicators, through the Continuing Unemployment Impact Index and the Unemployment Complaints Rate, which indicated a decline in the number of Americans who filed new applications for unemployment benefits, indicating that the labor market continued to function and that the sudden slowdown in early November was an exception.

- Retail sales, which decreased on an annual basis from 1% to 0.1% and on a monthly basis from 0.8% to 0.4%.

Second. The European economy:

The European economy is still experiencing a state of economic decline, as industrial production in the Eurozone fell more than expected in September, with the German economy suffering significantly among the various economies of the European bloc.

The European parties also continued to fear that Donald Trump would implement his promises regarding the tariffs that will affect some European goods heading to the US economy.

Andras Savos, President of the German Hungarian Chamber of Industry and Commerce, said that Trump's implementation of his promises will have repercussions on the already exhausted German economy.

This was reflected in the performance of the euro against the dollar, which fell on a weekly basis by 1.77% from levels of $1.07 to $1.052 per euro.

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

- The ZEW survey of economic sentiment declined significantly, from rates of 20.1 to 12.5.

- The rate of change in employment improved on an annual basis from 0.8% to 1%.

- The third quarter GDP stabilized in its revised reading at 0.9% on an annual basis, and at 0.4% monthly.

Third. The British Economy:

The British economy witnessed some important economic data during the past week, the most important of which were:

The unemployment rate for September rose in its revised reading from 4% to 4.3%.

The GDP declined on a monthly and quarterly basis, and rose significantly on an annual basis for the third quarter.

Fourth. The Japanese Economy:

The Japanese economy had an appointment with its most important economic data on Friday, with the release of the GDP data for the third quarter of this year.

The Japanese economy achieved an annual growth rate of 0.9% in the period from July to September, which is higher than expectations that indicated 0.7%, but it came less than the previous levels that were at 2.2%, with consumer spending holding up.

While it declined on a quarterly basis, the GDP price index, which is the broadest indicator of inflation, decreased significantly.

The relatively consistent economic data was reflected in the performance of the Japanese yen, which had recorded levels of 156 at the end of last week before closing at 154.3 yen per dollar, while the Nikkei 225 index closed down on a weekly basis by 2.4%.

fifth. The Chinese economy:

China is still living in the shadow of the decline against the backdrop of stimulus packages that came below expectations, specifically after the Standing Committee of the National People's Congress revealed a debt package worth 10 trillion yuan ($1.39 trillion) to ease the pressures of local government financing and stabilize faltering economic growth, which was considered disappointing for markets that were hoping that the stimulus packages would have a direct form of pumping money into the markets.

China has shown mixed economic data, as retail sales rose by 4.8% in October, which exceeded expectations, but growth in industrial output came below expectations, recording 5.3% compared to previous expectations that indicated an increase from 5.4% to 5.5%.

Silver was one of the most prominent metals that was negatively affected by the weak Chinese economic performance and the fading hopes for a more serious revitalization of the economy, as silver fell by more than 3% to hover around $30, the lowest level since last September of this year.

Economy Spotlight. What to expect next week:

Global markets will be waiting for the following economic data:

Tuesday, November 19, 2024:

Euro:

- Inflation, Consumer Price Index, with expectations of stability at 2%.

Canada:

- Inflation: Consumer Price Index.

Wednesday, November 20, 2024:

USA:

- Nvidia's third quarter data, specifically after the market closes.

Japan:

- Trade balance.

China:

- Interest rate (official lending rate) with expectations of no movement.

UK:

- Inflation rate (Consumer Price Index) with expectations of rising from 1.7% to 2.2%.

- Producer Price Index.

USA:

- US crude oil inventories.

- Federal Reserve members' speeches (Cook, Bowman)

Thursday, November 21, 2024:

USA:

- Unemployment claims rates.

- Philadelphia manufacturing index, with expectations of a decline that may negatively affect the dollar.

- Existing home sales expected to rise.

Friday, November 22, 2024:

Japan:

- Consumer price index expected to fall from 2.4% to 2.2% y/y

UK:

- Retail sales index.

USA:

- Manufacturing PMI

- Services PMI

- Michigan Inflation Expectations Index

Saturday, November 23, 2024

USA:

- FOMC member Michelle Bowman speech.