Economy Spotlight : The Most Important Events and What's Coming 4-10/11/2024

Introduction:

If last week was busy, the new weekly report " Economy Spotlight " discusses many developments in the global economic arena, which cast their shadows on various markets, starting with the Japanese elections and the ruling party's loss of its traditional majority, through the important economic data issued by many parties, most notably the American side.

We also discuss the financial results of giant companies for the third quarter, which were issued between Tuesday and Thursday of last week, and how they affected the performance of financial markets.

We also shed light on the situation on the European side, which carried important data last week, most notably the growth of the economy during the third quarter, and the inflation statement.

Meanwhile, we will review the proceedings of the Japanese Central Bank meeting, which held its seventh meeting this year, which will be followed by a meeting in December, which, along with the Bank of England meeting, will be the last meetings of the major central banks this year.

Economy Spotlight . Main economies:

First. The US economy:

Last week brought the US economy very important economic data, in addition to the financial data issued by many companies, most notably the giant technology companies.

We start with the financial data; as it was issued by more than 169 companies listed in the S&P 500 index, the most prominent of which were the results of five of the seven giant companies.

The five giant companies (Alphabet, Microsoft, Meta, Amazon, Apple) showed results that were greater than expected, but despite that, they indicated their fear of slowing growth in the near future, especially with the increase in the volume of spending on artificial intelligence, and fears of US-China trade relations.

As for the economic data, it came to consolidate the state of economic uncertainty, a week before the decisive date for the results of the US elections.

The GDP statement was issued, which grew by 2.8%, which is less than expectations that indicated it would stabilize at 3%, while consumer spending increased at its fastest pace in a year and a half.

The consumer confidence index rose contrary to expectations that it would decline, and job opportunities fell to their lowest levels in three years, specifically since April 2021.

The state of uncertainty is entrenched in the US labor market data, which was issued clearly conflicting, with analysts at Reuters indicating that it was affected by many factors, the most important of which are:

- Strikes in the airline industry.

- Reduction in manufacturing employment.

- The impact of the hurricanes that hit the country in recent months.

The report on the change in non-agricultural private sector jobs rose, contrary to expectations of a decline, while non-agricultural jobs declined very sharply, recording 12,000 jobs, the lowest number since December 2020.

While the unemployment index remained stable at 4.1%, which Reuters analysts saw as a blur in the picture of the US labor market so far.

As for inflation, the US side issued two indicators, the first indicator related to the prices of basic personal consumption expenditures, which expresses the consumer's suffering while purchasing goods and services, which decreased significantly from 2.8% to 2.2%. While the price index of basic personal consumption expenditures on an annual basis, it remained high at 2.7% compared to expectations of a decrease, and a slight increase on a monthly basis from 0.2% to 0.3%. While US manufacturing fell to its lowest level in 15 months in October, as the manufacturing purchasing managers index issued by the Institute for Supply Management fell to 46.5 from 47.2 compared to expectations of an increase to 47.6.

Second. The European economy:

The European side issued economic indicators, the most prominent of which was related to the gross domestic product, which reflected growth in the eurozone at a faster pace than expected in the third quarter of this year, when it grew by 0.4% compared to expectations of growth of only 0.2%, while it grew on an annual basis by 0.9%, which is higher than the previous quarter's reading when it was 0.6%, exceeding expectations of annual growth by 0.8%.

However, analysts indicated, despite this improvement, the continuation of risks and threats to the eurozone, represented by the imposition of huge customs duties if Trump wins the US elections, the escalation of trade tensions with China, and weak consumer confidence, with economists indicating to Reuters that the eurozone economy is still showing fragility, specifically due to the industrial recession.

Third. The Japanese economy:

The parliamentary elections were one of the most prominent files that the Japanese economy opened with last week, as the results showed that the Liberal Democratic Party lost the majority in the House of Representatives, which is the third time in the party's history and the second time during the current century, which prompted analysts to point out the extent of the economic ambiguity and uncertainty surrounding the Japanese economy in general as a result of the partisan division within the current government.

The Japanese economy also had an appointment with the Japanese Central Bank meeting, which came as expected, as interest rates stabilized at 0.25%, with officials at the Central Bank pointing to the risks surrounding the US economy, and their intention to raise interest rates on the Japanese yen if the economy continues to recover to combat inflation and return to 2% levels without harming the economy in general.

Fourth. The Chinese economy:

China is still living in the shadow of the ambiguity of its economic situation, as its industrial profit has declined to the negative range since March of this year, while its industrial purchasing managers' index rose slightly from October.

China also expressed its concern last week about the US tariffs that could be applied to the country, through the Chinese Ministry of Finance during a meeting of the economic working group between the two countries in Washington.

The European Union has officially agreed to impose customs duties on electric vehicles manufactured in China of up to more than 45%, which may cause a strong reaction from China towards the European Union, for which China is the most important and largest market ever, which is what Germany warned against when it objected to the European Commission's decision on this decision.

fifth. Commodities and precious metals:

Despite the historic price peak achieved by gold during the past week, when it exceeded $2786 per ounce, driven by political uncertainty and the approaching US elections, it returned and closed at levels close to the opening.

Gold closed at $2736, driven by economic data that cast doubt on the Federal Reserve making significant interest rate cuts in the remaining meetings of this year.

As for silver, it lost more than 2% during the past week, when it closed at $32.68, compared to $33.45 at which the silver price had opened.

Financial Markets. What to expect next week:

Global markets will be waiting for the following economic data:

Monday 4-11-2024

Japan: Culture Day holiday.

Tuesday 5-11-2024

USA:

• US elections.

• Trade balance.

• Services PMI for October.

• ISM Non-Manufacturing PMI.

Euro:

• Eurogroup meeting.

Wednesday 6-11-2024:

USA:

• US crude oil inventories.

Euro:

• Producer price index.

Japan:

• Minutes of the Bank of Japan Monetary Policy Committee meeting.

Thursday 7-11-2024:

USA:

• Federal interest rate decision.

• Unemployment claims rates.

China:

• Various indicators related to annual GDP and trade balance.

• China's foreign exchange reserves.

Sweden:

• Consumer price index.

• Interest rate decision.

UK:

• Interest rate decision.

Friday 8-11-2024

Euro:

• EU Leaders Summit

USA:

• Michigan Inflation Expectations Index.

Saturday 9-11-2024

China:

• Consumer Price Index.

• Producer Price Index.