On Friday, gains in chip stocks and technology megamergers drove the overall market higher. As of Friday's stock market close, the Dow Jones Index (US30) was up by 1.15% (+0.56% for the week), while the S&P 500 Index (US500) was up by 1.56% (+1.17% for the week). The NASDAQ Technology Index (US100) closed positive by 2.05% (+2.10% for the week). The S&P 500 (US500) and the Dow Jones Industrials (US300) reached 7-week highs and the NASDAQ (US100) tested a 2-month-high.
Friday's Fed comments had a mixed impact on stocks. On the negative side, Atlanta Fed President Bostic spoke in favor of pausing Fed rate hikes, stating, "I think we will reach the 2% target level without having to do anything else." On the other hand, San Francisco Fed President Daly said that if inflation continues to move sideways and the labor market and GDP growth remain steady or strong, it will probably be necessary to raise rates again. Currently, markets are betting on a 10% probability of a 25 bps rate hike at the next FOMC meeting on December 12-13 and a 24% probability of a 25 bps rate hike at the January 30-31, 2024 FOMC meeting.
In the US, the risk of a government shutdown is back on the table. If lawmakers in Washington fail to pass measures by Friday to at least temporarily fund the federal government's operations, there is a threat of a shutdown. On Saturday, House Speaker Mike Johnson unveiled a Republican temporary funding measure aimed at averting a partial shutdown, but members of both parties quickly criticized the unorthodox plan. The new controversy could reignite concerns about the management of the world's largest economy.
According to FactSet, the current earnings reporting season has been much better than analysts expected and is likely to show the first earnings-per-share growth in a year for companies in the S&P 500.
The University of Michigan's US Consumer Sentiment Index for November fell by 3.4 to a 6-month low of 60.4, weaker than expectations of 63.7. The University of Michigan's US Inflation Expectations Index for November unexpectedly rose to a 7-month high of 4.4% from 4.2% in October, versus expectations of a decline to 4.0%. In addition, 5-10-year inflation expectations rose to a 12-year high of 3.2%.
Equity markets in Europe were mostly down on Friday. Germany's DAX (DE40) was down by 0.77% (+0.10% for the week), France's CAC 40 (FR40) fell by 0.96% (-0.30% for the week), Spain's IBEX 35 (ES35) lost 0.36% (+0.81% for the week), and the UK's FTSE 100 (UK100) closed negative by 1.28% (-0.77% for the week).
Friday's comments from ECB President Lagarde indicate that she favors a pause in ECB rate hikes. Lagarde stated that keeping the deposit rate at the current level of 4% should be sufficient to contain inflation. There is a growing possibility that the ECB has peaked on rates, just like the US Fed.
UK GDP unexpectedly beat forecasts on most indicators. Over the last month, the economy grew by 0.2% (forecast 0.0%). However, the overall picture shows the economy is still depressed, with the 3-month average hitting annual lows and near negative territory.
Oil prices rose about 2% on Friday as Iraq voiced support for OPEC+ oil production cuts ahead of a meeting in two weeks on November 26. Amid weak economic data from China, the US, and the UK last week, concerns about the outlook for global demand offset worries about possible production disruptions related to the Middle East conflict. Analysts believe OPEC+ could continue to cut supplies if prices continue to fall.
Asian markets were mostly up last week. Japan's Nikkei 225 (JP225) was up by 0.36% for the week, China's FTSE China A50 (CHA50) was down by 0.04% over five trading days, Hong Kong's Hang Seng (HK50) fell by 3.97% for the week, and Australia's ASX 200 (AU200) was negative by 0.02% for the week.
Joe Biden and Xi Jinping are due to meet this week on the sidelines of the Asia-Pacific Economic Cooperation summit amid hopes for improved relations between the two largest economies.
S&P 500 (F)(US500) 4,347.35 +67.89 (+1.56%)
Dow Jones (US30) 34,283.10 +391.16 (+1.15%)
DAX (DE40) 15,234.39 −118.15 (−0.77%)
FTSE 100 (UK100) 7,360.55 −95.12 (−1.28%)
USD Index 105.80 −0.11 (−0.10%)
- – Japan Producer Price Index (m/m) at 01:50 (GMT+2).
by , 2023.11.13
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