Market Considerations and Analytics
Key Notes
In the wake of three significant US benchmark indices ending a losing streak and closing higher on Thursday as market players celebrated an increase in weekly jobless claims ahead of significant U.S. economic data, December S&P 500 futures are moving up +0.23% this morning. PPI data Gains in the technology, consumer services, and healthcare industries were principally responsible for the acceleration of three major U.S. stock indices.
According to the Labor Department bulletin released on Thursday, state income support claims grew slightly to 230K, as anticipated, but the unemployment rate increased to its highest level in 10 months around the end of November. Investors’ concerns about the health of the employment market were allayed by the statistics, which suggested that the Fed would soon soften its hardline line.
Currently, all eyes are on the United States. In a few hours, PPI data is likely to provide more insight into the potential direction of monetary policy. In comparison to the prior readings of +0.2% m/m and +8.0% y/y, economists anticipate that the November U.S. PPI will be +0.2% m/m and +7.2% y/y.
A smaller rate increase of 50 basis points on Wednesday will be highly likely if producer pricing pressures continue to decline; nevertheless, a higher-than-anticipated increase or, worse, a reversal in the downward trend, may jeopardize the Fed’s intentions for a shift with a less aggressive stance.
In the meanwhile, December’s monetary and fiscal policy meeting is expected to result in a 74.7% likelihood of a 50 basis point rate increase and a 25.3% possibility of a 75 basis point increase, according to U.S. rate futures.
Investors may also concentrate on the United States. The November reading of the Michigan Consumer Sentiment Index was 56.8. The preliminaries for December are predicted to be 56.9.
Today will see the publication of the initial U.S. Michigan Consumer Expectations Index. According to economists, this figure will increase from the prior reading of 55.6 to 56.0 in December.
U.S. Today will also see the release of core PPI data. U.S. economists predict Comparison to the previous readings of 0.0% m/m and +6.7% y/y, Core PPI is expected to be +0.2% m/m and +5.9% y/y in November.
United States 10-Year rates are at 3.487% in the bond markets, down -0.17%.
This day, the Euro Stoxx 50 futures are higher +0.10%, erasing some of the earlier losses for the week. Nonetheless, given that investors are anticipating the release of the most recent U.S. PPI data before the U.S. election next week The U.S. and CPI statistics Interest rate determination by the Federal Reserve.
Next week is also a meeting week for the European Central Bank, which is anticipated to raise rates by 50 basis points to combat the still-high inflation rate. Investors are concerned that tighter monetary conditions would probably cause a major worldwide recession in 2023.
Compared to predictions of +2.8% y/y, the October industrial production in Spain was announced at +2.5% y/y.
Today’s Asian stock markets closed in the black. Both Japan’s Nikkei 225 Stock Index (NIK) and China’s Shanghai Composite Index (SHCOMP) closed higher.
At the same time, the Transport, Shipbuilding, and Railway & Bus sectors all saw increases today, helping Japan’s Nikkei 225 Stock Index close stronger. The beta bof Nikkei 225 options is factored into the Nikkei Volatility, which decreased 16.81% to 18.66.
