Oil prices fell to a 4-month low. China's economy shows signs of recovery

US stock indices traded flat yesterday amid disappointing corporate earnings results. Cisco Systems (CSCO) fell by 11%, sending technology stocks tumbling after cutting its full-year earnings forecast. Also down more than 7% were shares of retailer Walmart (WMT) after it struck a cautious tone on the outlook for US shoppers. In addition, a more than 3% drop in the price of WTI crude oil to a near four-month low pressured energy stocks. At the stock market close, the Dow Jones Index (US30) was down by 0.13%, while the S&P 500 Index (US500) jumped by 0.12%. The Nasdaq Technology Index (US100) is up by 0.07%.

US weekly jobless claims rose by 32,000 to a two-year high of 1.865 million, indicating a weak labor market versus expectations of 1.843 million. Additionally, October manufacturing production fell by 0.7% m/m, weaker than expectations of 0.4% m/m and the largest decline in 4 months.

The US Senate voted 87-11 on Wednesday night to pass a temporary funding measure to avert a government shutdown. President Biden will now sign the bill into law. The measure would fund some parts of the government through January 19 and others through February 2.

Equity markets in Europe traded all without any momentum. Germany's DAX (DE40) rose by 0.24%, France's CAC 40 (FR40) fell by 0.57% yesterday, Spain's IBEX 35 (ES35) jumped by 0.28%, and the UK's FTSE 100 (UK100) closed negative by 1.01%.

Crude oil and gasoline prices fell sharply on Thursday, with crude oil falling to a 4-month low and gasoline falling to an 11-month low. Crude oil prices weathered Wednesday's negative impact when the EIA reported that weekly crude inventories rose more than expected. Additionally, crude oil funds saw selling on Thursday as weaker-than-expected global economic news weighs on the energy demand outlook.

Natural gas prices declined on Thursday after the EIA's weekly natural gas inventories rose more than expected. Natural gas inventories rose 60 Bcf last week, above expectations of 42 bcf and well above the 5-year average of 20 bcf.

Asian markets were mostly falling yesterday. Japan's Nikkei 225 (JP225) was down by 0.28% for the day, China's FTSE China A50 (CHA50) decreased by 0.79%, Hong Kong's Hang Seng (HK50) lost 1.36% for the day, and Australia's ASX 200 (AU200) was negative by 0.67% for Thursday.

Yesterday, Australian employment data for October was released, which showed a good result: plus 55k jobs vs. 22.8k expected, while the unemployment rate rose from 3.6% to 3.7%, in line with expectations. AUD/USD reaction was subdued as markets remain convinced that the RBA has peaked on interest rates.

The Bank of Japan (BoJ) is the only major central bank in the world to maintain negative interest rates and has yet to show any signs of abandoning unprecedented easing measures. Moreover, Wednesday's dismal GDP report, which showed that the economy contracted for the first time in three quarters, should allow the BoJ to postpone any policy changes, retreating from its ambitious monetary easing course. This, in turn, could undermine the Japanese yen (JPY) and contribute to a new rise in USD/JPY quotes.

Data from China's National Bureau of Statistics (NBS) showed on Wednesday that retail sales of consumer goods, a key indicator of consumption growth, rose 7.6% year-on-year in October, the fastest pace since May and accelerating from the 5.5% growth recorded in September. Industrial production also beat market expectations, rising at a 4.6% annualized rate in October, accelerating from September's 4.5% increase. This growth was also the strongest since April. Employment remained broadly stable, with the unemployment rate at 5% in October, unchanged from September. Considering the main economic indicators, the economy has maintained a steady recovery momentum and has laid a solid foundation for achieving full-year growth targets.

S&P 500 (F)(US500) 4,508.26 +5.38 (+0.12%)

Dow Jones (US30) 34,945.60 −45.61 (−0.13%)

DAX (DE40)  15,786.61 +38.44 (+0.24%)

FTSE 100 (UK100) 7,410.97 −75.94 (−1.01%)

USD Index  104.42 +0.02 (+0.02%)

• – UK Retail Sales (m/m) at 09:00 (GMT+2);
• – Switzerland Industrial Production (m/m) at 09:30 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 09:30 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – Canada Producer Price Index (m/m) at 15:30 (GMT+2);
• – US Building Permits (m/m) at 15:30 (GMT+2);
• – US FOMC Member Daly Speaks at 17:00 (GMT+2).

by JustMarkets, 2023.11.17

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.