Stock Markets

All major stock indexes advanced during the week. The 30-stock Dow Jones Industrial Average (DJIA) gained 1.96% while the Total Stock Market Index climbed by 2.17%. The broad S&P 500 Index went up by 1.68% and the technology-tracking Nasdaq Stock Market Composite added 1.73%. The NYSE Composite Index climbed by 2.43%. The CBOE Volatility Index (VIX), the gauge for investor risk perception, fell by 5.58%.

Stocks are on track to finish the year on a strong note. Solid fundamentals will continue to support equities all the way to the start of 2025. However, even with the current optimism, prudence is enjoined to anticipate potential curveballs and for investors to plan the positions to best take advantage of the growing potential. Tariffs and how the incoming administration may choose to use them are a source of uncertainty. The technology sector also appears to be proceeding through a period of consolidation to digest its disproportionate gains over the last two years.

In order to strengthen portfolios against potential risks, investors may seek to attain an appropriate allocation to value-style investments and balance small- and mid-cap companies that tend to generate a greater share of their revenue in the U.S. They will tend to relatively benefit from stronger domestic growth and lower tax rates which the incoming administration promised to implement.

U.S. Economy

The Department of Labor reported on Wednesday that initial jobless claims unexpectedly dropped for the week ended November 16, 2024. This appeared to have driven positive market sentiment toward the end of the week. Applications for unemployment benefits fell to 213,000. This is the lowest reading since April 2024 and constituted a decline of 6,000 from the prior week. The number of continuing claims reached a three-year high of 1.91 trillion, however, some of this increase was due to secondary effects of the aircraft machinist strike at Boeing, a matter which has since been resolved.

Investors also appear to have been encouraged by the National Association of Realtors’ report of existing home sales in October. For the first time since July 2021, existing home sales rose year-over-year for the first time. Factors leading to the growth in housing demand are continued economic growth, additional job gains, and stabilizing mortgage rates, as cited by the upbeat report.

As investors look for clues around the pace of interest rate cuts, much of the macroeconomic focus remained on the Federal Reserve’s final meeting of the year in December. Federal Reserve Governor Lisa Cook stated in a speech on Wednesday that “the disinflationary process is continuing” and that she perceives the path of short-term interest rates would appropriately be downward although the magnitude and timing of rate cuts should be driven by inflation and labor market data.

Metals and Mining

Over the past year, the gold market has been on a rally with shallow dips that caused many cautious investors to await a correction to the support at $2,100 per ounce. However, the U.S. election and its decisive results created the opportunity for many on the sidelines to jump back in. Markets experienced fresh momentum in the U.S. dollar and rising bond yields. A significant headwind for gold was created by investors who zeroed in on Trump’s America-first policies. Gold prices fell by more than 9% from its peak at $2,800 per ounce three weeks ago. With its nearly 6% surge this week, it appears that the correction is over, as gold once again demonstrated that it is much bigger than the U.S. market. Its role as a necessary global financial asset continues to grow. Gold’s attractiveness to a significant safe-haven bid as the war in Ukraine escalates. In the Middle East and Asia, meanwhile, geopolitical tensions remain high with China striving to assert its dominance.

Spot prices of precious metals surged for the week. Gold shot up 5.97% from its previous weekly close at $2,563.25 to end this week at $2,716.19 per troy ounce. Silver closed at $31.35 per troy ounce, which is 3.57% higher than its last weekly close at $30.27. Platinum, which closed last week at $941.80 and ended this week at $966.30 per troy ounce for a 2.60% gain. Palladium, priced last week at $953.58, rose by 6.11% to close this week at $1,011.87 per troy ounce. The three-month LME prices of industrial metals ended mixed for the week. Copper closed this week at $9,008.50 per metric ton appreciated by 0.07% from its close last week at $9,002.50. Aluminum came from its last weekly close at $2,649.50 to settle at $2,631.50 per metric ton for a modest decline of -0.68%. Zinc ended this week at $2,990.00 per metric ton, 1.44% higher than last week’s close of $2,947.50. Tin, which settled last week at $28,742.00, ended this week at $28,750.00 per metric ton for a modest gain of 0.03%.

Energy and Oil

Brent futures have been trading within a narrow range of $73-74 per barrel. However, the return of geopolitical risk has caused oil prices to climb and in effect recover most of November’s losses to date. Russia’s launch of hypersonic missiles into Ukraine keeps the markets distracted for now. Meanwhile, the possible outcome of an OPEC+ meeting taking place next week looms large for oil. In the coming week, expect plenty of OPEC+ policy speculation. Responding to geopolitical worries, the International Atomic Energy Agency passed a resolution urging Iran to enhance cooperation with the global nuclear community. The IAEA further requests for a comprehensive assessment of Iran’s arsenal. Tehran defies compliance, however, and instead suggests capping its stock of uranium.

Natural Gas

For the report week from Wednesday, November 13 to Wednesday, November 20, 2024, the Henry Hub spot price rose by $0.24 from $2.10 per million British thermal units (MMBtu) to $2.34/MMBtu. Regarding Henry Hub futures, the price of the December 2024 NYMEX contract increased by $0.21, from $2.983/MMBtu at the start of the report week to $3.193/MMBtu at the week’s end. The price of the 12-month strip averaging December 2024 to November 2025 futures contracts rose by $0.13 to $3.227/MMBtu. Natural spot prices rose at all major pricing locations for the report week. Price changes ranged from an increase of $0.03 at a Houston Ship Channer to an increase of $2.45 at the Waha Hub.

International natural gas futures prices increased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased $0.63 to a weekly average of $14.17/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.90 to a weekly average of $14.38/MMBtu. In the week last year corresponding to this report week (beginning November 15 to November 22, 2023), the prices were $16.83/MMBtu in East Asia and $14.41/MMBtu at the TTF.

World Markets

the pan-European STOXX Europe 600 Index closed the week 1.06% higher in local currency terms. Investors were hopeful that the European Central Bank (ECB) could lower borrowing costs in December after a deterioration in the economic outlook was signaled by the purchasing managers’ surveys. Notwithstanding the pan-European index performance, most major stock indexes fell, but they were overall mixed. Italy’s FTSE MIB dipped by 2.04%, France’s CAC 40 Index declined slightly by 0.20%, and Germany’s DAX rose by 0.58%. The UK’s FTSE 100 Index surged by 2.46%. In the euro area, business activity unexpectedly contracted in November, which, according to purchasing managers’ surveys, underscore the uncertain economic outlook. The HCOB Flash Eurozone Composite PMI Output Index fell unexpectedly to a 10-month low. The manufacturing sector plunged deeper into recession and the services sector began to struggle after two months of marginal growth. The PMIs for France and Germany, the bloc’s largest economies, also shrank, while the UK’s business activity ended a 12-month period of sustained expansion and moved into contractionary territory. Expectations that the ECB could further ease monetary policy in December appeared to be bolstered by the Weak PMI data. This may be offset, however, by a pickup in negotiated wage growth which may reinforce the case for continued policy caution. Negotiated wage growth is a measure monitored by the ECB for signals of underlying inflationary pressures.

Japan’s equities markets pulled back during the week, albeit modestly, with the Nikkei 225 Index dropping by 0.93% and the broader TOPIX Index sliding by 0.56%. Impacting investors were heightened geopolitical tensions that dented risk appetite and drove demand for assets perceived to be safer. These safer assets include the Japanese yen which traded mostly within the JPY 154 range against the U.S. dollar. Consumer inflation remained above the Bank of Japan’s (BoJ’s) 2% target in October. The headline consumer price index fell to 2.3% year-on-year, this however remained aligned with expectations given the return of electricity and gas subsidies. BoJ Governor Kazuo Ueda said that if the economy and prices move as expected, the bank will keep raising rates. On the economic front, service providers recorded a slight expansion in activity within Japan’s private sector, according to the November Flash Purchasing Managers’ Index (PMI) data. On the other hand, manufacturers saw a sustained reduction in output. Across the private sector, price pressures remained elevated and firms increasingly sought to pass on higher cost burdens to consumers. On Friday, Japan’s government approved an economic package to ease the pain of inflation on households and businesses. The package is also designed to revitalize the struggling regional economies. It is estimated to add JPY 39 trillion (US$250 billion) to the economy, combined with expected spending from the private sector. Measures adopted include subsidies to curb rising energy costs and cash handouts to low-income households. Another measure in the package involves an increase in the tax-free salary threshold to boost disposal incomes.

A light economic calendar and concerns about the incoming Trump administration curbed risk appetites and caused equities to decline. The Shanghai Composite Index dropped by 1.91% and the blue-chip CSI 300 declined by 2.6%. The Hong Kong benchmark Hang Seng Index gave up 1.01%. The country’s banks left their one- and five-year loan prime rates unchanged at 3.1% and 3.6% respectively, a move largely anticipated after banks slashed the benchmark lending rates by 25 basis points in October, which was greater than expected. This makes it cheaper for consumers to take out mortgages and other loans. A slew of stimulus measures was unveiled by the government in late September to revive consumer demand and boost the ailing housing sector. Officials have signaled further easing measures in the near term. Potentially cutting the reserve requirement ratio for domestic banks is among these measures. Some analysts point out, however, that policymakers will wait until the new U.S. administration takes over in January and U.S. policies are clarified. In other developments, China’s youth unemployment rate eased for the second straight month since August when it hit its highest level this year. Excluding students, the jobless rate for 16- to 24-year-olds came in at 17.1% in October, down from 17.6% in September.

The Week Ahead

The PCE inflation data, consumer confidence, and the minutes of the Fed’s November FOMC meeting are among the important economic releases scheduled for this week.

Key Topics to Watch

• S&P Case-Shiller home price index (20 cities) for Sept.
• Consumer confidence for Nov.
• New home sales for Oct.
• Minutes of Fed’s November FOMC meeting
• Initial jobless claims for Nov. 23
• Durable-goods orders for Oct.
• Durable-goods minus transportation for Oct.
• Advanced U.S. trade balance in goods for Oct.
• Advanced retail inventories for Oct.
• Advanced wholesale inventories for Oct.
• GDP (first revision) for Q3
• Chicago Business Barometer (PMI) for Nov.
• Personal income (nominal) for Oct.
• Personal spending (nominal) for Oct.
• PCE index for Oct.
• PCE (year-over-year)
• Core PCE index for Oct.
• Core PCE (year-over-year)
• Pending home sales for Oct.

Markets Index Wrap-Up

Stock Markets

After the exuberant post-election rally, the stock market takes a breather as winning investors take profits. Major stock indexes across the board ended lower this week. The 30-stock Dow Jones Industrial Average dropped by 1.24% while the Total Stock Market fell by 2.15%. The broad S&P 500 Index lost by 2.08% and the technology-heavy Nasdaq Stock Market Composite dipped further, giving up 3.15%.  The NYSE Composite lost by 1.46%. The CBOE Volatility Index (VIX), the generally accepted indicator of investor risk perception, climbed by 8.03%.

The wide dispersion of sector returns reflects the potential policy implications of the incoming administration for corporate earnings. Financials and energy shares continue to benefit from hopes for deregulation and merger approvals. Similarly, the price of Bitcoin had surged by nearly a third (32.46%) at its peak on Wednesday since the eve of the election, on investors’ anticipation of looser regulation for digital currencies. On the other hand, some healthcare shares sharply fell on Friday following the announcement on Thursday evening that Robert F. Kennedy, Jr., would be President-elect Donald Trump’s nominee as Secretary of Health and Human Services (HHS). Kennedy is a vocal critic of the pharmaceutical industry and existing public health programs, particularly vaccine initiatives. As HHS head, he would oversee Medicare, Medicaid, and other programs accounting for roughly one-quarter of government spending.

Also, notable movers during the week were electric vehicle (EV) makers, particularly Tesla. A surge in the stock price appears to have been driven by promises made by President-elect Trump that Tesla CEO Elon Musk would play a key role in his administration. At its intraday high on Monday, the stock gained 42.63% since the day before the election. Tesla and other EV makers fell back late in the week, however, when Reuters confirmed that the incoming administration plans to eliminate the $7,500 consumer tax credit for EV purchases.

U.S. Economy

The economic calendar this week was underscored by inflation data released on Wednesday. The results were largely in line with expectations. Headline prices rose by 0.2% in October and core prices (excluding food and energy) rose by 0.3%. However, year-on-year headline inflation rose for the first time since March, from 2.4% to 2.6%, due largely to stubbornly high housing costs. On Thursday, the monthly headline and core producer price inflation were released. Producer prices rose in line with expectations and their consumer counterparts.

As if to address the market expectations that rates are likely to be lowered soon. Federal Reserve Chair Jerome Powell delivered a speech on Thursday and remarked that “the economy is not sending any signals that we need to be in a hurry to lower rates,” thereby somewhat dampening sentiment. Expectations priced into futures markets for a quarter-point cut in December fell moderately over the week, from 64.6% to 58.4%. Expectations for a full percentage point of cuts by the end of the year fell further, from 41.3% to 32.6%, although it is not certain whether this was in reaction to Powell’s comments or new policy signals from the incoming administration.

Metals and Mining

Spot prices of precious metals fell for this week. Gold gave up 4.53% from its close one week ago at $2,684.77 to close this week at $2,563.25 per troy ounce. Silver ended this week at 3.32% down from its closing price last week of $31.31 to end this week at $30.27 per troy ounce. Platinum fell by 3.16% from last week’s close at $972.49 to finish this week at $941.80 per troy ounce. Palladium dropped by 3.91% from its last weekly close of $992.35 to settle this week at $953.58 per troy ounce. The three-month LME prices of industrial materials were mixed. Copper, which ended last week at $9,443.50, closed this week at $9,002.50 per metric ton, a drop of 4.67%. Aluminum, last priced at $2,620.50 one week ago, ended this week at $2,649.50 per metric ton for a gain of 1.11%. Zinc closed the previous week at $2,979.50 and this week at $2,947.50 per metric ton for a loss of 1.07%. Tin, priced last week at $31,648.00, last traded this week at $28,742.00 per metric ton for a loss of 9.18%.

Energy and Oil

The overwhelmingly bearish sentiment in the oil market was partly offset by the steep gasoline and diesel inventory draws in the United States. However, the offset was not large enough to stop the decline in oil prices. Meanwhile, China’s refinery throughput fell by 4.6% year-over-year to 14.02 million barrels per day (b/d), bearing disproportionately more heavily on independent teapot refiners in Shandong province as their utilization rate plunged to 58%, almost 20 percentage points lower than this time last year. Brent below $72 per barrel appears justified, given that China posted its seventh successive month of refinery run declines, and Jerome Powell cooled down expectations on U.S. interest rate cuts.

In other news, OPEC once more cut global oil demand growth forecasts for 2024 and 2025 for the fourth consecutive month. The projections were revised mostly by lowering China’s consumption upside to 450,000 b/d from last month’s monthly oil report, expecting 2024 demand growth to come in at 1.82 million b/d. Meanwhile, the International Energy Agency (IEA) believes that the 2025 global oil supply will exceed demand by an astounding 1 million b/d. This is equal to nearly 1% of total production worldwide, driven by the U.S., Guyana, and Canada. The IEA is keeping its demand forecast for next year unchanged at 990,000 b/d.

Natural Gas

For this report week beginning Wednesday, November 6 and ending Wednesday, November 13, 2024, the Henry Hub spot price rose by $0.30 from $1.80 per million British thermal units (MMBtu) to $2.10/MMBtu.  Regarding Henry Hub futures, the price of the December 2024 NYMEX contract increased by $0.24, from $2.747/MMBtu to $2.983/MMBtu through the report week. The price of the 12-month strip averaging December 2024 through November 2025 futures contracts rose by $0.14 to $3.100/MMBtu. Natural gas spot prices rose at most locations along with the Henry Hub price this report week. Price changes ranged from a decrease of $0.72 at Northwest Sumas to an increase of $1.63 at the Waha Hub.

International natural gas futures prices increased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.02 to a weekly average of $13.54/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.69 to a weekly average of $13.48/MMBtu. In the week last year corresponding to this report week (beginning November 8 to November 15, 2023), the prices were $17.17/MMBtu in East Asia and $14.97/MMBtu at the TTF.

World Markets

The pan-European STOXX Europe 600 Index ended lower by 0.69%, its fourth consecutive weekly descent. Investor sentiment is weighed on the concerns about the incoming Trump administration’s trade policies and the political upheaval in Germany. Also dampening buying incentives were cautious comments by Federal Reserve Chair Jerome Powell regarding U.S. interest rates. The major stock indexes were mixed. France’s CAC 40 Index dipped by 0.94%, Italy’s FTSE MIB climbed by 1.11%, and Germany’s DAX was mostly unchanged. The UK’s FTSE 100 Index was modestly down. Data on the Eurozone’s economy remained supportive of a soft landing. Eurostat’s second GDP estimate confirmed the surprisingly resilient 0.4% third-quarter expansion. Additionally, although Germany’s economy is expected to contract by 0.1%, the European Commission projected growth of 0.8% in 2024. Other data indicate that the labor market remained stable. In the third quarter, employment rose by 0.2%, compared to 0.1% in the preceding three months. Regarding monetary policy, the European Central Bank (ECB) policymakers unanimously approved of the quarter-point interest rate cut in October because, according to the minutes of the meeting, “the disinflationary trend was getting stronger” and there was a need to avoid “harming the real economy by more than was necessary.” The ECB also cited “prudent risk management” and provided insurance against downside risks that could lead to an undershooting of the inflation target.

Japan’s stocks lost ground over the week. The Nikkei 225 Index fell by 2.2% while the broader TOPIX Index slid by 1.1%. Providing some degree of support was the weakness of the yen since many of the listed counters generate revenues from export sales, but the uncertainties related to President-elect Donald Trump’s incoming administration raising tariffs weighed on the outlook for these same companies that heavily export to the U.S. The yen weakened to the JPY 155 range against the U.S. dollar from about JPY 152.6 at the end of the preceding week. The greenback strengthened at the back of Trump’s victory in the recent presidential election. The yen came under pressure when some fears arose that the incoming administration’s policies could prove inflationary and halt the plans of the Federal Reserve to lower borrowing costs. Another factor is the uncertainty regarding the timing of future interest rate hikes by the Bank of Japan (BoJ). Japan’s gross domestic product grew by 0.2% quarter-on-quarter during the third quarter of this year, slowing from the 0.5% increase recorded for the second quarter. The economy grew by 0.9% on an annualized basis, down from 2.2%. Increased private consumption (which accounts for more than half of the economy) drove the second consecutive quarter of GDP growth. A one-off income tax cut and higher summer bonuses also supported the GDP reading for that quarter.

Evidence of persistent deflation and worries about potential U.S. tariffs under income U.S. President Trump impacted investor confidence and brought Chinese equities lower for the week. The Shanghai Composite Index dropped by 3.52% while the blue-chip CSI 300 lost 3.29%. The Hong Kong benchmark Hang Seng Index slumped by 6.28%. Largely due to lower food and energy prices, China’s consumer price index rose by a below-consensus 0.3% in October year-on-year, down from 0.4% in September. Core inflation (which excludes volatile food and energy costs) increased by 0.2%, more than the 2.5% decrease analysts predicted and accelerating from the 2.8% drop in September, further extending the deflation in factor gate prices that commenced in late 2022. Retail sales expanded by 4.8% from a year ago which exceeded both analysts’ expectations and September’s 3.2% rise, marking the strongest growth since February. Industrial production rose by 5.3% year-on-year, lower than forecasted, and the 5.4% increase in September amid weaker auto sales. According to data from the National Bureau of Statistics, new home prices in 70 cities dropped in October by 0.5% from September, compared to home prices dropping by 0.7% from August. The October decline marked the second month of slowing home price declines and the slowest pace since March. The improvement was the result of Beijing unleashing a series of stimulus measures in recent months, which are aimed at boosting the housing sector. The measures include reducing mortgage rates, cutting taxes on home purchases, and relaxing homebuying curbs in big cities.

The Week Ahead

In the coming week, important economic releases will include the Conference Board’s leading indicators, PMI data, and the results of the Philadelphia Fed manufacturing survey.

Key Topics to Watch

• Home builder confidence index for Nov.
• Chicago Fed President Austan Goolsbee welcoming remarks (Nov. 18)
• Housing starts for Oct.
• Building permits for Oct.
• Chicago Fed President Austan Goolsbee speaks (Nov. 19)
• Fed Gov. Lisa Cooks speaks (Nov. 20)
• Fed Gov. Michelle Bowman speaks (Nov. 20)
• Initial jobless claims for Nov. 16
• Philadelphia Fed manufacturing survey
• Cleveland Fed President Beth Hammack welcoming remarks (Nov. 21)
• Existing home sales for Oct.
• Leading economic index for Oct.
• Kansas City Fed President Jeff Schmid speaks (Nov. 21)
• Fed Vice Chair for Supervision Michael Barr speaks (Nov. 21)
• S&P flash U.S. services PMI for Nov.
• S&P flash U.S. manufacturing PMI for Nov.
• Consumer sentiment (final) for Nov.
• Fed Gov. Michelle Bowman speaks (Nov. 22)

Markets Index Wrap-Up

Stock Markets

After the exuberant post-election rally, the stock market takes a breather as winning investors take profits. Major stock indexes across the board ended lower this week. The 30-stock Dow Jones Industrial Average dropped by 1.24% while the Total Stock Market fell by 2.15%. The broad S&P 500 Index lost by 2.08% and the technology-heavy Nasdaq Stock Market Composite dipped further, giving up 3.15%.  The NYSE Composite lost by 1.46%. The CBOE Volatility Index (VIX), the generally accepted indicator of investor risk perception, climbed by 8.03%.

The wide dispersion of sector returns reflects the potential policy implications of the incoming administration for corporate earnings. Financials and energy shares continue to benefit from hopes for deregulation and merger approvals. Similarly, the price of Bitcoin had surged by nearly a third (32.46%) at its peak on Wednesday since the eve of the election, on investors’ anticipation of looser regulation for digital currencies. On the other hand, some healthcare shares sharply fell on Friday following the announcement on Thursday evening that Robert F. Kennedy, Jr., would be President-elect Donald Trump’s nominee as Secretary of Health and Human Services (HHS). Kennedy is a vocal critic of the pharmaceutical industry and existing public health programs, particularly vaccine initiatives. As HHS head, he would oversee Medicare, Medicaid, and other programs accounting for roughly one-quarter of government spending.

Also, notable movers during the week were electric vehicle (EV) makers, particularly Tesla. A surge in the stock price appears to have been driven by promises made by President-elect Trump that Tesla CEO Elon Musk would play a key role in his administration. At its intraday high on Monday, the stock gained 42.63% since the day before the election. Tesla and other EV makers fell back late in the week, however, when Reuters confirmed that the incoming administration plans to eliminate the $7,500 consumer tax credit for EV purchases.

U.S. Economy

The economic calendar this week was underscored by inflation data released on Wednesday. The results were largely in line with expectations. Headline prices rose by 0.2% in October and core prices (excluding food and energy) rose by 0.3%. However, year-on-year headline inflation rose for the first time since March, from 2.4% to 2.6%, due largely to stubbornly high housing costs. On Thursday, the monthly headline and core producer price inflation were released. Producer prices rose in line with expectations and their consumer counterparts.

As if to address the market expectations that rates are likely to be lowered soon. Federal Reserve Chair Jerome Powell delivered a speech on Thursday and remarked that “the economy is not sending any signals that we need to be in a hurry to lower rates,” thereby somewhat dampening sentiment. Expectations priced into futures markets for a quarter-point cut in December fell moderately over the week, from 64.6% to 58.4%. Expectations for a full percentage point of cuts by the end of the year fell further, from 41.3% to 32.6%, although it is not certain whether this was in reaction to Powell’s comments or new policy signals from the incoming administration.

Metals and Mining

Spot prices of precious metals fell for this week. Gold gave up 4.53% from its close one week ago at $2,684.77 to close this week at $2,563.25 per troy ounce. Silver ended this week at 3.32% down from its closing price last week of $31.31 to end this week at $30.27 per troy ounce. Platinum fell by 3.16% from last week’s close at $972.49 to finish this week at $941.80 per troy ounce. Palladium dropped by 3.91% from its last weekly close of $992.35 to settle this week at $953.58 per troy ounce. The three-month LME prices of industrial materials were mixed. Copper, which ended last week at $9,443.50, closed this week at $9,002.50 per metric ton, a drop of 4.67%. Aluminum, last priced at $2,620.50 one week ago, ended this week at $2,649.50 per metric ton for a gain of 1.11%. Zinc closed the previous week at $2,979.50 and this week at $2,947.50 per metric ton for a loss of 1.07%. Tin, priced last week at $31,648.00, last traded this week at $28,742.00 per metric ton for a loss of 9.18%.

Energy and Oil

The overwhelmingly bearish sentiment in the oil market was partly offset by the steep gasoline and diesel inventory draws in the United States. However, the offset was not large enough to stop the decline in oil prices. Meanwhile, China’s refinery throughput fell by 4.6% year-over-year to 14.02 million barrels per day (b/d), bearing disproportionately more heavily on independent teapot refiners in Shandong province as their utilization rate plunged to 58%, almost 20 percentage points lower than this time last year. Brent below $72 per barrel appears justified, given that China posted its seventh successive month of refinery run declines, and Jerome Powell cooled down expectations on U.S. interest rate cuts.

In other news, OPEC once more cut global oil demand growth forecasts for 2024 and 2025 for the fourth consecutive month. The projections were revised mostly by lowering China’s consumption upside to 450,000 b/d from last month’s monthly oil report, expecting 2024 demand growth to come in at 1.82 million b/d. Meanwhile, the International Energy Agency (IEA) believes that the 2025 global oil supply will exceed demand by an astounding 1 million b/d. This is equal to nearly 1% of total production worldwide, driven by the U.S., Guyana, and Canada. The IEA is keeping its demand forecast for next year unchanged at 990,000 b/d.

Natural Gas

For this report week beginning Wednesday, November 6 and ending Wednesday, November 13, 2024, the Henry Hub spot price rose by $0.30 from $1.80 per million British thermal units (MMBtu) to $2.10/MMBtu.  Regarding Henry Hub futures, the price of the December 2024 NYMEX contract increased by $0.24, from $2.747/MMBtu to $2.983/MMBtu through the report week. The price of the 12-month strip averaging December 2024 through November 2025 futures contracts rose by $0.14 to $3.100/MMBtu. Natural gas spot prices rose at most locations along with the Henry Hub price this report week. Price changes ranged from a decrease of $0.72 at Northwest Sumas to an increase of $1.63 at the Waha Hub.

International natural gas futures prices increased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.02 to a weekly average of $13.54/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.69 to a weekly average of $13.48/MMBtu. In the week last year corresponding to this report week (beginning November 8 to November 15, 2023), the prices were $17.17/MMBtu in East Asia and $14.97/MMBtu at the TTF.

World Markets

The pan-European STOXX Europe 600 Index ended lower by 0.69%, its fourth consecutive weekly descent. Investor sentiment is weighed on the concerns about the incoming Trump administration’s trade policies and the political upheaval in Germany. Also dampening buying incentives were cautious comments by Federal Reserve Chair Jerome Powell regarding U.S. interest rates. The major stock indexes were mixed. France’s CAC 40 Index dipped by 0.94%, Italy’s FTSE MIB climbed by 1.11%, and Germany’s DAX was mostly unchanged. The UK’s FTSE 100 Index was modestly down. Data on the Eurozone’s economy remained supportive of a soft landing. Eurostat’s second GDP estimate confirmed the surprisingly resilient 0.4% third-quarter expansion. Additionally, although Germany’s economy is expected to contract by 0.1%, the European Commission projected growth of 0.8% in 2024. Other data indicate that the labor market remained stable. In the third quarter, employment rose by 0.2%, compared to 0.1% in the preceding three months. Regarding monetary policy, the European Central Bank (ECB) policymakers unanimously approved of the quarter-point interest rate cut in October because, according to the minutes of the meeting, “the disinflationary trend was getting stronger” and there was a need to avoid “harming the real economy by more than was necessary.” The ECB also cited “prudent risk management” and provided insurance against downside risks that could lead to an undershooting of the inflation target.

Japan’s stocks lost ground over the week. The Nikkei 225 Index fell by 2.2% while the broader TOPIX Index slid by 1.1%. Providing some degree of support was the weakness of the yen since many of the listed counters generate revenues from export sales, but the uncertainties related to President-elect Donald Trump’s incoming administration raising tariffs weighed on the outlook for these same companies that heavily export to the U.S. The yen weakened to the JPY 155 range against the U.S. dollar from about JPY 152.6 at the end of the preceding week. The greenback strengthened at the back of Trump’s victory in the recent presidential election. The yen came under pressure when some fears arose that the incoming administration’s policies could prove inflationary and halt the plans of the Federal Reserve to lower borrowing costs. Another factor is the uncertainty regarding the timing of future interest rate hikes by the Bank of Japan (BoJ). Japan’s gross domestic product grew by 0.2% quarter-on-quarter during the third quarter of this year, slowing from the 0.5% increase recorded for the second quarter. The economy grew by 0.9% on an annualized basis, down from 2.2%. Increased private consumption (which accounts for more than half of the economy) drove the second consecutive quarter of GDP growth. A one-off income tax cut and higher summer bonuses also supported the GDP reading for that quarter.

Evidence of persistent deflation and worries about potential U.S. tariffs under income U.S. President Trump impacted investor confidence and brought Chinese equities lower for the week. The Shanghai Composite Index dropped by 3.52% while the blue-chip CSI 300 lost 3.29%. The Hong Kong benchmark Hang Seng Index slumped by 6.28%. Largely due to lower food and energy prices, China’s consumer price index rose by a below-consensus 0.3% in October year-on-year, down from 0.4% in September. Core inflation (which excludes volatile food and energy costs) increased by 0.2%, more than the 2.5% decrease analysts predicted and accelerating from the 2.8% drop in September, further extending the deflation in factor gate prices that commenced in late 2022. Retail sales expanded by 4.8% from a year ago which exceeded both analysts’ expectations and September’s 3.2% rise, marking the strongest growth since February. Industrial production rose by 5.3% year-on-year, lower than forecasted, and the 5.4% increase in September amid weaker auto sales. According to data from the National Bureau of Statistics, new home prices in 70 cities dropped in October by 0.5% from September, compared to home prices dropping by 0.7% from August. The October decline marked the second month of slowing home price declines and the slowest pace since March. The improvement was the result of Beijing unleashing a series of stimulus measures in recent months, which are aimed at boosting the housing sector. The measures include reducing mortgage rates, cutting taxes on home purchases, and relaxing homebuying curbs in big cities.

The Week Ahead

In the coming week, important economic releases will include the Conference Board’s leading indicators, PMI data, and the results of the Philadelphia Fed manufacturing survey.

Key Topics to Watch

• Home builder confidence index for Nov.
• Chicago Fed President Austan Goolsbee welcoming remarks (Nov. 18)
• Housing starts for Oct.
• Building permits for Oct.
• Chicago Fed President Austan Goolsbee speaks (Nov. 19)
• Fed Gov. Lisa Cooks speaks (Nov. 20)
• Fed Gov. Michelle Bowman speaks (Nov. 20)
• Initial jobless claims for Nov. 16
• Philadelphia Fed manufacturing survey
• Cleveland Fed President Beth Hammack welcoming remarks (Nov. 21)
• Existing home sales for Oct.
• Leading economic index for Oct.
• Kansas City Fed President Jeff Schmid speaks (Nov. 21)
• Fed Vice Chair for Supervision Michael Barr speaks (Nov. 21)
• S&P flash U.S. services PMI for Nov.
• S&P flash U.S. manufacturing PMI for Nov.
• Consumer sentiment (final) for Nov.
• Fed Gov. Michelle Bowman speaks (Nov. 22)

Markets Index Wrap-Up

Stock Markets

U.S. stock indexes rallied sharply this week in reaction to the decisive U.S. presidential election outcome that cleared the cloud of uncertainty hovering over the markets. The 30-stock Dow Jones Industrial Average (DJIA) jumped by 4.61% while the Total Stock Market climbed by 5.06%. The broad S&P 500 gained by 4.66% while the technology-heavy Nasdaq Stock Market Composite surged by 5.74%.  The NYSE Composite added 3.55%. Investor risk perception as gauged by the CBOE Volatility Index (VIX) dropped by 31.72%.

Stocks posted their best-ever post-election rally in the nation’s history, with the Republicans garnering a strong political mandate, having won the White House, the Senate, and most likely the House. There are potential market implications from the shift in the balance of power, despite campaign trail pledges not always translating into policy. The new administration’s promise of tax cuts and deregulation could enhance more rapid economic growth. On the other hand, tariffs and debt worries may cause further rate hikes and pressure bonds.

During this cycle, the Federal Reserve cut interest rates for the second time and continued to maintain a somewhat restrictive policy. Nevertheless, the Fed may be convinced to move more slowly in anticipation of the strong growth and possibly more dovish fiscal policy next year as markets start to price in a shallower rate-cutting cycle. Fundamental conditions remain favorable, which may create opportunities to broaden equity allocations and lock in high bond yields. In any case, it is advisable to refocus on long-term fundamentals rather than focusing solely on recent political shifts.

U.S. Economy

The Federal Reserve announced a 25-basis-point (0.25 percentage point) cut in the federal funds rate following its scheduled policy meeting concluded on Thursday. This is the Fed’s first easing move since it cut rates by 50 basis points in mid-September. However, the week’s biggest surprise was the release of the Institute for Supply Management’s gauge of October services sector activity on Tuesday. The services sector activity came in at 56.0 which is well above expectation (readings above 50.0 indicate expansion) and the best performance since August. Fortunately, even as activity picked up, price pressures somewhat eased, reversing a string of three monthly gains. Surveyed companies reported they were only minimally impacted by recent severe weather as compared to the larger impact on manufacturing firms.

As yields largely ended lower than where they ended the previous week, U.S. Treasuries generated positive returns heading into Friday. Some short-term yields increased slightly while intermediate- and long-term yields ended slightly lower. (Recall that yields and bond prices move in opposite directions.) On Wednesday, the previous day’s election results sent yields upward, although the expected rate cut from the Federal Reserve helped bring them lower by Thursday evening.

Metals and Mining

The spot price of precious metals corrected on the back of improving the risk perception of investors in the financial markets, reducing the demand for risk haven assets for the moment. Gold closed at $2,684.77 per troy ounce this week, down by 1.89% from last week’s closing price of $2,736.53. Silver closed at $31.31 per troy ounce, lower by 3.63% from the previous weekly close of $32.49. Platinum settled at $972.49 per troy ounce, down by 2.37% from last week’s closing price of $996.08. Palladium closed this week at $992.35 per troy ounce, down by 10.16% from last week’s close at $1,104.60. The three-month LME prices of industrial metals were mixed. Copper ended the week at $9,443.50 per metric ton, lower by 1.33% from the previous week’s closing price of $9,570.50. Aluminum ended at $2,620.50 per metric ton, 0.79% higher than its last traded price of $2,600.00 one week ago. Zinc settled at $2,979.50 per metric ton, 2.93% down from last week’s closing price of $3,069.50. Tin closed at $31,648.00 per metric ton, 0.24% lower than the previous week’s close of $31,724.00.

Energy and Oil

Global newsfeeds this week were dominated by the U.S. presidential election, resulting in widespread speculation regarding how the new administration would actualize its election promises in the coming weeks and months. In the meantime, the approaching Hurricane Rafael, which may be the last in this Atlantic season, has temporarily shut down about 400,000 barrels per day (b/d) of production. Ahead of Hurricane Rafael through the U.S. Gulf of Mexico, offshore operators evacuated 17 producing platforms. Even though it is gradually weakening, the seventeenth named storm of this hurricane season threatens some 4 million b/d of production capacity. In recent sessions, ICE Brent traded around the $75 per barrel level, suggesting that oil prices will remain rangebound. For the longer term, President Trump’s return to power has renewed the prospects of revising the stalled 830,000 b/d Keystone XL pipeline which is intended to carry Canadian oil from Alberta. Operator TC Energy is expected to drop its $15 billion claim against the U.S. government.

Natural Gas

For the report week from Wednesday, October 30, to Wednesday, November 6, 2024, the Henry Hub spot price fell by $0.14 from $1.94 per million British thermal units (MMBtu) to $1.80/MMBtu.  Regarding Henry Hub futures, the price of the December 2024 NYMEX contract decreased by $0.10, from $2.845/MMBtu at the start of the week to $2.747/MMBtu at the week’s end. The price of the 12-month strip averaging December 2024 through November 2025 futures contracts declined by $0.07 to $2.965/MMBtu. Natural gas spot prices fell at most major pricing locations for this report week. Price changes ranged from a decrease of $2.57 at the Waha Hub to an increase of $0.25 at SoCal Citygate.

International natural gas futures prices decreased this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia decreased by $0.17 to a weekly average of $13.52/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, decreased by $0.66 to a weekly average of $12.79/MMBtu. In the week last year corresponding to this report week (beginning November 1 and ending November 8, 2023), the prices were $17.46/MMBtu in East Asia and $14.63/MMBtu at the TTF.

World Markets

Worries about the impact of U.S. President-elect Donald Trump’s trade policies on European economic growth and central bank policy weighed on market sentiment this week. The pan-European STOXX Europe 600 Index ended 0.84% lower in local currency terms. Major stock indexes ended weaker: Italy’s FTSE MIB lost 2.48%, France’s CAC 40 Index declined by 0.95%, and Germany’s DAX softened by 0.21%. The UK’s FTSE 100 Index dipped by 1.28%. The Bank of England’s (BoE’s) policy committee voted 8 to 1 to reduce the key Bank Rate for a second time this year by a quarter-point to 4.75%, in light of inflation continuing to decelerate. Sweden likewise lowered its key rate although Norway left its policy rate unchanged. On the economic front, the HCOB eurozone composite purchasing managers’ index (PMI) was revised higher to 50 in October from an earlier estimate of 49.7. At this level, the indicator sits at the borderline of expansion (greater than 50) and contraction (less than 50). Manufacturing contracted at a slower pace than first estimated, while the services sector output expanded at a slightly faster rate. Business confidence fell to its lowest level for the year so far.

Japan’s stock markets climbed over the week. The Nikkei 225 Index gained 3,8% and the broader TOPIX Index climbed 3.7%. The outcome of the U.S. presidential election and the Federal Reserve rate cut positively impacted investor risk appetite. These events overshadowed the discouraging domestic corporate earnings season where there were some downgrades to company guidance, and the adverse effect of yen strength on Japan’s export-heavy industries. The yen appreciated to about JPY 152 against the USD, from around JPY 153 at the end of the previous week. Authorities committed to closely monitoring the impact of Donald Trump’s election victory on the country’s economy and finances, given the close economic ties between the two countries. On the economic front, Japan’s real (inflation-adjusted) wages fell by 0.1% in September, following a revised decline of 0.8% in August. In line with expectations, nominal wages grew by 2.8% in September, lagging consumer inflation at 2.9%. Household spending fell 1.1% year-on-year in September which was lower than the consensus estimate of 2.1% decline.

China’s stocks rallied as concerns about potential U.S. tariff hikes were offset by Beijing’s unveiling of fresh stimulus measures. The Shanghai Composite Index advanced by 5.51% while the blue-chip CSI 300 gained by 5.5%. The Hong Kong benchmark Hang Seng Index ended higher by 1.08%. The standing committee of the National People’s Congress, China’s top legislative body, announced on Friday a RMB 10 trillion program to refinance local government debt, a key national economic and financial risk flagged by Beijing. Policymakers also raised the local government debt ceiling from RMB 29.52 trillion to RMB 35.52 trillion. This is the first time that the government raised the ceiling midyear since 2015. On trade, exports rose by 12.7% in October which exceeds the forecast and is up sharply from 2.4% in September. This is the fastest export growth rate since July 2022 and was attributed to better weather and steep discounts. Imports fell by 2.3%, down from the previous month’s growth rate of 0.3%. The overall trade surplus rose to $95.72 billion from $81.71 billion in September. The growth in October’s exports indicated strong demand for Chinese goods, which has been an optimistic spot for the economy. Analysts cautioned, however, that the country’s export outlook has become increasingly uncertain in light of a possible trade war when Trump assumes office in 2025.

The Week Ahead

Included among the important economic reports scheduled for release this week are the CPI and PPI inflation, retails sales, and industrial production data.

Key Topics to Watch

• NFIB optimism index for Oct.
• Consumer price index for Oct.
• CPI year over year
• Core CPI for Oct.
• Core CPI year over year
• Monthly U.S. federal budget for Oct.
• Initial jobless claims for Nov. 9
• Producer price index for Oct.
• PPI year over year
• Core PPI for Oct.
• Core PPI year over year
• Import price index for Oct.
• Import price index minus fuel for Oct.
• Empire State manufacturing survey for Nov.
• U.S. retail sales for Oct.
• Retail sales minus autos for Oct.
• Industrial production for Oct.
• Capacity utilization for Oct.
• Business inventories for Sept.

Markets Index Wrap-Up

Stock Markets

All the major indexes are down for this week. The 30-stock Dow Jones Industrial Average (DJIA) slipped down by 0.15% while the Total Stock Market fell by 1.16%. The broad S&P 500 Index dropped by 1.37% with losses among small-cap, mid-cap, and super-composite counters. The Nasdaq Stock Market Composite edged down by 1.50%, and the NYSE Composite gave up 1.04%. The CBOE Volatility Indicator (VIX), which tracks investor risk perception, rose by 7.62%.

On Wednesday, the technology-oriented Nasdaq Composite and the S&P MidCap 400 Index reached record intraday highs before sharply falling back on Thursday. Due partly to cautious earnings reports from Facebook parent Meta Platforms and software giant Microsoft, growth stocks generally lagged value shares. Small caps also outperformed large caps. Roughly 42% of the companies in the S&P 500 Index were expected to report third-quarter earnings over the week. Analysts expected that overall earnings for the S&P 500 would have increased by 5.1% compared to the same quarter one year ago. This would indicate a faster pace of growth than expectations before the start of the reporting season when analysts anticipated earnings to grow by 4.3%.

U.S. Economy

This week, data on two critical key factors were released ahead of the U.S. elections – corporate earnings growth and the U.S. labor market. According to the data, the economy is moderating but remains solidly positive. Earnings growth for the third quarter remains on track for 5%, which is slightly above expectations of approximately 4% growth at the start of the quarter. Earnings growth for the full year is expected to be 9%, well above last year’s 1% growth rate. The jobs report for October came in well below expectations. Some events, however, that may have distorted this reading were last month’s hurricanes and ongoing labor strikes. The labor market may be moderating, but it is not collapsing.

On Tuesday, the Labor Department reported that the number of job openings in September had fallen to its lowest level since January 2021 at.44 million. The number of Americans leaving jobs was relatively unchanged, as well as the number of those quitting voluntarily which is considered a better measure of labor market conditions. On Friday, however, the Labor Department reported that nonfarm payrolls were overall “essentially unchanged” over the month, with employers adding only 12,000 jobs. This is the lowest jobs numbers since December 2020. The impact reflected a decline of 44,000 jobs in transport equipment manufacturing activity due to the Boeing strike. There was little or no growth in employment in other major industries which should have compensated for the weakness.

Also, on Friday, the Institute for Supply Management’s gauge of manufacturing activity had unexpectedly dropped to 46.5. This is the seventh straight monthly decline and the lowest level in 15 months.  According to the Institute, “Demand remained subdued as companies continue to show an unwillingness to invest in capital and inventory due to concerns about federal monetary policy direction in light of the fiscal policies proposed by both major parties.”

The softening of the macroeconomic data nevertheless signifies that the Federal Reserve is still on track to lower interest rates in both November and December this year. The economy that remains resilient combined with lower rates has historically favored financial markets broadly.

Metals and Mining

There is no doubt that precious metals saw significant momentum over the past month due to the volatile environment leading to the election. In the weeks leading up to November, the risk uncertainty continued to rise regarding anticipation about which political party would gain control over the White House and the two chambers of Congress. However, while the gold market is overdue for a correction, the fear of missing out, or FOMO, is growing in the marketplace as analysts note that dips are being aggressively bought up and surprising any remaining bears in the market. Gold has managed to hold support at every major breakout level in this step-by-step rally since July. In August it held support at $2,400, in September at $2,500, and in October at  $2,600. As the U.S. economy and labor market slow, Gold continues to be well supported.

The spot prices of precious metals lost ground over the week. Gold, previously at $2,747.56, closed this week at $2,736.53 per troy ounce for a drop of 0.40%. Silver closed at $33.72 one week ago, and ended this week at $32.49 per troy ounce for a loss of 3.65%.  Platinum, which closed at $1,025.29 one week ago, closed this week at $996.08 per troy ounce, for a loss of 2.85%. Palladium, with a closing price last week of 1,196.50, settled at $1,104.60 per troy ounce this week, losing 7.68% from last week. The three-month LME prices of industrial metals also generally fell with few exceptions. Copper began at $9,602.50 last week and fell by 0.33% to end at $9,570.50 per metric ton. Aluminum lost 2.89% from its close last week at $2,677.50 to end this week at $2,600.00 per metric ton. Zinc dropped by 1.05% from its ending price last week at $3,102.00 to close this week at $3,069.50 per metric ton. Tin, on the other hand, rose by 1.27% from its close last week at $31,325.00 to finish the week at $31,724.00 per metric ton.

Energy and Oil

Iran reemerged as the main talking point of the markets no sooner had OPEC+ depressed market sentiment by admitting a potential rollover of its cuts in 2025. Due to concerns about soft oil demand at the heels of China’s slowdown and rising non-OPEC supply, OPEC+ could postpone its planned increase in oil production. This move could bring back the 2.2 million barrels per day (b/d) output under eight countries’ voluntary cuts. Regarding geopolitical developments, the oil markets are now anticipating an Iranian attack on Israel, after the Israeli retaliatory strike had been downplayed. Iran is expected to respond with numerous drones from Iraqi territory. As a result, ICE Brent futures were lifted back to $74-$75 per barrel by a semblance of geopolitical risk premium, ahead of a highly uncertain week when the U.S. president is elected.

Natural Gas

For the report week from Wednesday, October 23, to Wednesday, October 30, 2024, the Henry Hub spot price rose by $0.03 from $1.91 per million British thermal units (MMBtu) at the start of the week to $1.94/MMBtu at the week’s end. Regarding Henry Hub futures, the November NYMEX contract expired on Tuesday at $2.346/MMBtu, up modestly from the previous Wednesday. The December 2024 NYMEX contract price decreased to $2.845/MMBtu, down by $0.06 over the report week. The price of the 12-month strip averaging December 2024 through November 2025 futures contracts declined by $0.03 to $3.038/MMBtu. Regional natural gas spot price changes were mixed this report week. Price changes ranged from a decrease of $0.12 at Eastern Gas South to an increase of $1.63 at PG&E Citygate.

International natural gas futures prices rose this report week. Weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.25 to a weekly average of $13.70/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.70 to a weekly average of $13.45/MMBtu. In the week last year that corresponds to this report week (beginning October 25 and ending November 1, 2023), the prices were $17.82/MMBtu in East Asia and $15.36/MMBtu at the TTF.

World Markets

European stocks lost ground in trading this week. The pan-European STOXX Europe 600 closed 1.52% lower in local currency terms, due to concerns regarding the potential for escalating conflict in the Middle East, poor corporate results for some companies, and moderating expectations for the European Central Bank (ECB) to further cut interest rates. The major stock indexes in the region also suffered from sell-offs. Italy’s FTSE MIB plummeted by 1.42%, France’s CAC 40 Index sank by 1.18%, and Germany’s DAX lost by 1.07%. The UK’s FTSE 100 Index slid by 0.29%. In the third quarter, the eurozone economy expanded by 0.4% sequentially. Encouragingly, this exceeds the consensus estimate of 0.2% and is double the second-quarter growth rate. France and Spain reported stronger-than-expected economic growth. So did Germany which unexpectedly avoided a recession and grew by 0.2%. However, Italy’s economy stalled. Meanwhile, as the decline in energy prices last year dropped out of the annual comparison, the annual headline inflation accelerated slightly faster than forecast to 2% in October from 1.7% in September. The core rate (excluding energy, food, alcohol, and tobacco prices) remained unchanged at 2.7%. Services inflation also remained constant at 3.9%.

Japan’s stock market climbed over the week. The Nikkei 225 Index gained by 0.4% and the broader TOPIX index advanced by 1.0% as the Bank of Japan (BoJ) kept interest rates steady amid political uncertainty. In the country’s lower house election on Sunday, October 27, Japan’s ruling Liberal Democratic Party (LDP)-Komeito coalition failed to secure a majority, as the opposition capitalized on public discontent with the higher cost of living and the LDP corruption scandal. In an effort to maintain control of the lower house, Prime Minister Shigeru Isheba faces the prospect of a minority government as it sought the support of smaller parties. Initially, the yen weakened against the U.S. dollar on the outcome of the election on expectations that a period of political uncertainty would follow and potentially impact the BoJ’s monetary policy and future fiscal policy. The BoJ held its policy rate steady at 0.25% at its October meeting, aligning with expectations. By the end of the week, the yen traded within the JPY 152 range against the greenback, virtually unchanged. In the central bank’s view, the economic risks in the U.S. had broadly diminished which the market has taken to suggest that conditions could be aligning for another rate hike. Market participants are divided on whether this would come as early as December of this year or January of next year.

Chinese equities pulled back this week despite data showing that economic activity had begun to pick up. The Shanghai Composite Index lost 0.84%, while the blue-chip CSI 300 declined by 1.68%. The Hong Kong benchmark Hang Seng Index gave up 0.41%.  The country’s factory activity grew for the first time since April due to growing demand. According to the statistics office, the official manufacturing purchasing managers’ index (PMI) rose from 49.8 in September to an above-consensus 50.1 In October, moving from contraction to expansion. The nonmanufacturing PMI, which is the gauge for construction and services activity, rose to a lower-than-expected 50.2 in October from 50 in September. Increased spending during the country’s Golden Week holiday partly accounts for the rise in services activity. On the other hand, the private Caixin/S&P Global survey of manufacturing activity advanced from 49.3 in September to 50.3 in October amid new order growth. Regarding the property sector, the value of new home sales by the country’s top 100 developers rose by 7.1% in October year-on-year compared to September’s decline of 37.3%. According to the China Real Estate Information Corporation, this marks the first year-on-year growth in 2024. Overall, the first batch of major economic indicators after the rollout of Beijing’s stimulus package point to early signs of recovery in the Chinese economy.

The Week Ahead

In the coming week, look forward to important events including the U.S. presidential election, the FOMC meeting, and the release of the preliminary report on U.S. productivity for the third quarter.

Key Topics to Watch

• Factory orders for Sept.
• U.S. trade deficit for Sept.
• ISM services for Oct.
• S&P final U.S. services PMI for Oct.
• Initial jobless claims for Nov. 2
• U.S. productivity (prelim) for Q3
• Wholesale inventories for Sept.
• FOMC interest-rate decision
• Fed Chair Powell press conference (Nov. 7)
• Consumer credit for Sept.
• Consumer sentiment (prelim) for Nov.

Markets Index Wrap-Up

Stock Markets

All the major indexes are down for this week. The 30-stock Dow Jones Industrial Average (DJIA) slipped down by 0.15% while the Total Stock Market fell by 1.16%. The broad S&P 500 Index dropped by 1.37% with losses among small-cap, mid-cap, and super-composite counters. The Nasdaq Stock Market Composite edged down by 1.50%, and the NYSE Composite gave up 1.04%. The CBOE Volatility Indicator (VIX), which tracks investor risk perception, rose by 7.62%.

On Wednesday, the technology-oriented Nasdaq Composite and the S&P MidCap 400 Index reached record intraday highs before sharply falling back on Thursday. Due partly to cautious earnings reports from Facebook parent Meta Platforms and software giant Microsoft, growth stocks generally lagged value shares. Small caps also outperformed large caps. Roughly 42% of the companies in the S&P 500 Index were expected to report third-quarter earnings over the week. Analysts expected that overall earnings for the S&P 500 would have increased by 5.1% compared to the same quarter one year ago. This would indicate a faster pace of growth than expectations before the start of the reporting season when analysts anticipated earnings to grow by 4.3%.

U.S. Economy

This week, data on two critical key factors were released ahead of the U.S. elections – corporate earnings growth and the U.S. labor market. According to the data, the economy is moderating but remains solidly positive. Earnings growth for the third quarter remains on track for 5%, which is slightly above expectations of approximately 4% growth at the start of the quarter. Earnings growth for the full year is expected to be 9%, well above last year’s 1% growth rate. The jobs report for October came in well below expectations. Some events, however, that may have distorted this reading were last month’s hurricanes and ongoing labor strikes. The labor market may be moderating, but it is not collapsing.

On Tuesday, the Labor Department reported that the number of job openings in September had fallen to its lowest level since January 2021 at.44 million. The number of Americans leaving jobs was relatively unchanged, as well as the number of those quitting voluntarily which is considered a better measure of labor market conditions. On Friday, however, the Labor Department reported that nonfarm payrolls were overall “essentially unchanged” over the month, with employers adding only 12,000 jobs. This is the lowest jobs numbers since December 2020. The impact reflected a decline of 44,000 jobs in transport equipment manufacturing activity due to the Boeing strike. There was little or no growth in employment in other major industries which should have compensated for the weakness.

Also, on Friday, the Institute for Supply Management’s gauge of manufacturing activity had unexpectedly dropped to 46.5. This is the seventh straight monthly decline and the lowest level in 15 months.  According to the Institute, “Demand remained subdued as companies continue to show an unwillingness to invest in capital and inventory due to concerns about federal monetary policy direction in light of the fiscal policies proposed by both major parties.”

The softening of the macroeconomic data nevertheless signifies that the Federal Reserve is still on track to lower interest rates in both November and December this year. The economy that remains resilient combined with lower rates has historically favored financial markets broadly.

Metals and Mining

There is no doubt that precious metals saw significant momentum over the past month due to the volatile environment leading to the election. In the weeks leading up to November, the risk uncertainty continued to rise regarding anticipation about which political party would gain control over the White House and the two chambers of Congress. However, while the gold market is overdue for a correction, the fear of missing out, or FOMO, is growing in the marketplace as analysts note that dips are being aggressively bought up and surprising any remaining bears in the market. Gold has managed to hold support at every major breakout level in this step-by-step rally since July. In August it held support at $2,400, in September at $2,500, and in October at  $2,600. As the U.S. economy and labor market slow, Gold continues to be well supported.

The spot prices of precious metals lost ground over the week. Gold, previously at $2,747.56, closed this week at $2,736.53 per troy ounce for a drop of 0.40%. Silver closed at $33.72 one week ago, and ended this week at $32.49 per troy ounce for a loss of 3.65%.  Platinum, which closed at $1,025.29 one week ago, closed this week at $996.08 per troy ounce, for a loss of 2.85%. Palladium, with a closing price last week of 1,196.50, settled at $1,104.60 per troy ounce this week, losing 7.68% from last week. The three-month LME prices of industrial metals also generally fell with few exceptions. Copper began at $9,602.50 last week and fell by 0.33% to end at $9,570.50 per metric ton. Aluminum lost 2.89% from its close last week at $2,677.50 to end this week at $2,600.00 per metric ton. Zinc dropped by 1.05% from its ending price last week at $3,102.00 to close this week at $3,069.50 per metric ton. Tin, on the other hand, rose by 1.27% from its close last week at $31,325.00 to finish the week at $31,724.00 per metric ton.

Energy and Oil

Iran reemerged as the main talking point of the markets no sooner had OPEC+ depressed market sentiment by admitting a potential rollover of its cuts in 2025. Due to concerns about soft oil demand at the heels of China’s slowdown and rising non-OPEC supply, OPEC+ could postpone its planned increase in oil production. This move could bring back the 2.2 million barrels per day (b/d) output under eight countries’ voluntary cuts. Regarding geopolitical developments, the oil markets are now anticipating an Iranian attack on Israel, after the Israeli retaliatory strike had been downplayed. Iran is expected to respond with numerous drones from Iraqi territory. As a result, ICE Brent futures were lifted back to $74-$75 per barrel by a semblance of geopolitical risk premium, ahead of a highly uncertain week when the U.S. president is elected.

Natural Gas

For the report week from Wednesday, October 23, to Wednesday, October 30, 2024, the Henry Hub spot price rose by $0.03 from $1.91 per million British thermal units (MMBtu) at the start of the week to $1.94/MMBtu at the week’s end. Regarding Henry Hub futures, the November NYMEX contract expired on Tuesday at $2.346/MMBtu, up modestly from the previous Wednesday. The December 2024 NYMEX contract price decreased to $2.845/MMBtu, down by $0.06 over the report week. The price of the 12-month strip averaging December 2024 through November 2025 futures contracts declined by $0.03 to $3.038/MMBtu. Regional natural gas spot price changes were mixed this report week. Price changes ranged from a decrease of $0.12 at Eastern Gas South to an increase of $1.63 at PG&E Citygate.

International natural gas futures prices rose this report week. Weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.25 to a weekly average of $13.70/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.70 to a weekly average of $13.45/MMBtu. In the week last year that corresponds to this report week (beginning October 25 and ending November 1, 2023), the prices were $17.82/MMBtu in East Asia and $15.36/MMBtu at the TTF.

World Markets

European stocks lost ground in trading this week. The pan-European STOXX Europe 600 closed 1.52% lower in local currency terms, due to concerns regarding the potential for escalating conflict in the Middle East, poor corporate results for some companies, and moderating expectations for the European Central Bank (ECB) to further cut interest rates. The major stock indexes in the region also suffered from sell-offs. Italy’s FTSE MIB plummeted by 1.42%, France’s CAC 40 Index sank by 1.18%, and Germany’s DAX lost by 1.07%. The UK’s FTSE 100 Index slid by 0.29%. In the third quarter, the eurozone economy expanded by 0.4% sequentially. Encouragingly, this exceeds the consensus estimate of 0.2% and is double the second-quarter growth rate. France and Spain reported stronger-than-expected economic growth. So did Germany which unexpectedly avoided a recession and grew by 0.2%. However, Italy’s economy stalled. Meanwhile, as the decline in energy prices last year dropped out of the annual comparison, the annual headline inflation accelerated slightly faster than forecast to 2% in October from 1.7% in September. The core rate (excluding energy, food, alcohol, and tobacco prices) remained unchanged at 2.7%. Services inflation also remained constant at 3.9%.

Japan’s stock market climbed over the week. The Nikkei 225 Index gained by 0.4% and the broader TOPIX index advanced by 1.0% as the Bank of Japan (BoJ) kept interest rates steady amid political uncertainty. In the country’s lower house election on Sunday, October 27, Japan’s ruling Liberal Democratic Party (LDP)-Komeito coalition failed to secure a majority, as the opposition capitalized on public discontent with the higher cost of living and the LDP corruption scandal. In an effort to maintain control of the lower house, Prime Minister Shigeru Isheba faces the prospect of a minority government as it sought the support of smaller parties. Initially, the yen weakened against the U.S. dollar on the outcome of the election on expectations that a period of political uncertainty would follow and potentially impact the BoJ’s monetary policy and future fiscal policy. The BoJ held its policy rate steady at 0.25% at its October meeting, aligning with expectations. By the end of the week, the yen traded within the JPY 152 range against the greenback, virtually unchanged. In the central bank’s view, the economic risks in the U.S. had broadly diminished which the market has taken to suggest that conditions could be aligning for another rate hike. Market participants are divided on whether this would come as early as December of this year or January of next year.

Chinese equities pulled back this week despite data showing that economic activity had begun to pick up. The Shanghai Composite Index lost 0.84%, while the blue-chip CSI 300 declined by 1.68%. The Hong Kong benchmark Hang Seng Index gave up 0.41%.  The country’s factory activity grew for the first time since April due to growing demand. According to the statistics office, the official manufacturing purchasing managers’ index (PMI) rose from 49.8 in September to an above-consensus 50.1 In October, moving from contraction to expansion. The nonmanufacturing PMI, which is the gauge for construction and services activity, rose to a lower-than-expected 50.2 in October from 50 in September. Increased spending during the country’s Golden Week holiday partly accounts for the rise in services activity. On the other hand, the private Caixin/S&P Global survey of manufacturing activity advanced from 49.3 in September to 50.3 in October amid new order growth. Regarding the property sector, the value of new home sales by the country’s top 100 developers rose by 7.1% in October year-on-year compared to September’s decline of 37.3%. According to the China Real Estate Information Corporation, this marks the first year-on-year growth in 2024. Overall, the first batch of major economic indicators after the rollout of Beijing’s stimulus package point to early signs of recovery in the Chinese economy.

The Week Ahead

In the coming week, look forward to important events including the U.S. presidential election, the FOMC meeting, and the release of the preliminary report on U.S. productivity for the third quarter.

Key Topics to Watch

• Factory orders for Sept.
• U.S. trade deficit for Sept.
• ISM services for Oct.
• S&P final U.S. services PMI for Oct.
• Initial jobless claims for Nov. 2
• U.S. productivity (prelim) for Q3
• Wholesale inventories for Sept.
• FOMC interest-rate decision
• Fed Chair Powell press conference (Nov. 7)
• Consumer credit for Sept.
• Consumer sentiment (prelim) for Nov.

Markets Index Wrap-Up

Stock Markets

The major indexes ended lower this past week as rising bond yields attracted investors’ attention. The 30-stock Dow Jones Industrial Average (DJIA) lost 2.68% while the Total Stock Market Index fell by 1.15%. The broad S&P 500 Index lost 0.96% while the NYSE Composite Index gave up 2.16%. The only major index that managed to end in positive territory was the technology-heavy Nasdaq Stock Market Composite which advanced by 0.16% for the week. Investor risk perception, as indicated by the CBOE Volatility Index (VIX), was elevated by 12.76%.

After posting gains in each of the six previous weeks, the S&P 500 corrected this week. The stock market appeared to take cues from the U.S. Treasury market, where the futures market pricing currently reflects a shallower Fed rate-cutting cycle. Growth stocks outperformed value stocks as evidenced by the slight gain in the technology-heavy Nasdaq Composite Index. Tesla was the best performer in the S&P 500, posting unexpectedly strong quarterly earnings and projecting 20% to 30% vehicle sales growth in 2025. The electric vehicle manufacturer experienced its best gain (22%) in more than 11 years, driven by good quarterly results and a bright outlook.

U.S. Economy

The Fed’s Beige Book, which is released eight times a year and provides a summary of economic conditions in each Fed region, was issued in a relatively light week of economic news. This latest release reported little economic growth across most of the U.S., tepidly stating that the demand for workers “eased somewhat” while “inflation continued to moderate.” The Book’s assessment of the economic developments did not have a noticeable effect in stopping the increase in longer-term Treasury yields that began in late September. The market’s expectations for Fed rate cuts have steadily declined, now reaching a total of 125 basis points of easing in the next 12 months on Friday.

Metals and Mining

The spot prices of precious metals ended positive for the week. Gold closed at $2,747.56 per troy ounce, up by 0.96% from its close last week at $2,721.46. Silver ended at $33.72 per troy ounce, unchanged from its close last week. Platinum last traded this week at $1,025.29 per troy ounce, 0.98% higher than last week’s closing price of $1,015.31. Palladium closed this week at $1,196.50 per troy ounce, 10.37% more than its close one week ago at $1,084.09. The three-month LME prices of industrial minerals were mixed. Copper closed this week at $9,602.50 per metric ton, 0.24% below its previous weekly close of $9,625.50. Aluminum’s last trade was at $2,677.50 per metric ton, 2.51% higher than its last traded price one week ago at $2,612.00. Zinc ended this week at $3,102.00, 0.40% higher than its prior week’s close at $3,089.50. Tin ended this week at $31,325.00 per metric ton, 0.04% higher than its last weekly close at $31,313.00.

Energy and Oil

The Israel-Iran conflict just advanced into its next phase with the retaliatory missile attack overnight that Israel launched into Iranian territory. Its impact on the main oil market narrative for October is still to be seen. Added to that is the speculation regarding the results of the U.S. presidential election, which is just slightly more than a week away, and how it would impact future escalation scenarios. In the meantime, Brent and WTI are expected to post only minor week-over-week increases as they trend around $75 and $71 per barrel respectively. The upside is limited by a stronger dollar and a larger-than-expected U.S. inventory spike. In other industry news, the top executives of Enterprise Products and Plains All American announced that they would not be building any new crude oil pipeline out of the Permian shale play. They believe that the next step for crude evacuation capacity would be optimization,

Natural Gas

For the report week from Wednesday, October 16 to Wednesday, October 23, 2024, the Henry Hub spot price declined by $0.30 from $2.21 per million British thermal units (MMBtu) to $1.91/MMBtu. Regarding Henry Hub futures, the price of the November 2024 NYMEX contract decreased by $0.03, from $2.367/MMBtu at the start of the report week to $2.342/MMBtu at the week’s end. The price of the 12-month strip averaging November 2024 through October 2025 futures contracts rose by $0.03 to $2.971/MMBtu. Regional natural gas spot prices fell at most major pricing locations this report week. Price changes ranged from a decrease of $1.17 at PG&E Citygate to an increase of $0.11 at the Houston Ship Channel.

International natural gas futures price changes were mixed this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia increased by $0.28 to a weekly average of $13.45/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, Europe’s most liquid natural gas market, decreased by $0.04 to a weekly average of $12.75/MMBtu. In the week last year that corresponds to this report week (beginning October 18 and ending October 25, 2023), the prices were $18.21/MMBtu in East Asia and $15.65/MMBtu at the TTF.

World Markets

European stocks modestly declined on expectations that the Federal Reserve may ease monetary policy more gradually than expected. The pan-European STOXX Europe 600 Index ended 1.18% lower in local currency terms. The major European stock indexes also lost ground. France’s CAC 40 Index lost by 1.52%, Italy’s FTSE MIB slid by 1.22%, and Germany’s DAX dipped by 0.99%. The UK’s FTSE 100 Index gave back 1.31%. Business activity continued to contract in the euro area in October as new orders continued to dwindle, according to S&P Global. The composite Purchasing Managers’ Index (PMI), which combines activity in the manufacturing and services sectors, is estimated to register 49.7 in October compared to its September estimate of 49.6. While it is a slight improvement, the PMI readings below 50 indicate contraction, and failure of the PMI reading to break above 50 signals a failure to attain expansion. The main sources of weakness were France and Germany, the two largest economies. Several European Central Bank (ECB) policymakers, including those formerly in favor of aggressive policies, broached the likelihood of more policy easing this year, although there is some disagreement regarding the pace at which rate cuts should be applied.

Japanese equities lost traction over the week amid uncertainty over the outcome of the country’s general election on Sunday, October 27.  The Nikkei 225 Index gave up 2.74% while the broader TOPIX Index fell by 2.63%. The yen weakened to the high end of the JPY 151 range against the greenback, from JPY 149.5 at the end of the preceding week, mainly due to the heightened investor caution ahead of the elections. The yen also succumbed to some pressure from a strengthening dollar as investors discounted the prospect that the Federal Reserve was less likely to aggressively reduce interest rates. The Tokyo-area core consumer price index (CPI) rose by 1.8% year-on-year in October. This CPI is a leading indicator of nationwide inflation, and it rose slightly more than expected but slowing from the September 2.0% level. The slowdown was attributed to the reinstatement of electricity and gas subsidies. Bank of Japan (BoJ) Governor Kazuo Ueda urged the need to proceed cautiously due to the huge uncertainty and to avoid entertaining expectations that interest rates are going to stay low for a very long time.

Chinese stocks rose for the week as the central bank implemented more stimulus measures to support the economy. The Shanghai Composite Index gained by 1.17% while the blue-chip CSI 300 advanced by 0.79%. The Hong Kong benchmark Hang Seng Index fell by 1.03%. In line with a broad stimulus package unveiled by the People’s Bank of China (PBOC) in late September aimed at reviving China’s economy, Chinese banks lowered their one- and five-year loan prime rates by 25 basis points to 3.1% and 3.6% respectively to make it cheaper for consumers to take out mortgages and other loans. The PBOC also signaled additional easing measures in the short term. Depending on liquidity conditions, it made possible that another potential rate cut to the reserve requirement ratio may be taken. The central bank last cut the reserve requirement ratio by 50 basis points on September 27. The Chinese youth unemployment rate, for 16- to 24-year-olds, excluding students, eased to 17.6% in September from a record high of 18.8% in August. The August unemployment rate marked the highest level of youth unemployment since the statistics bureau stopped including students in the metric in December 2023.

The Week Ahead

Included among the economic releases scheduled for this week are the PCE inflation data, the third quarter GDP, and the nonfarm payrolls report for October.

Key Topics to Watch

• S&P Case-Shiller home price index (20 cities) for Sep.
• Consumer confidence for Oct.
• Job openings for Sept.
• ADP employment for Oct.
• GDP for Q3
• Advanced U.S. trade balance in goods for Sept.
• Advanced retail inventories for Sept.
• Advanced wholesale inventories for Sept.
• Pending home sales for Sept.
• Personal income for Oct.
• Personal spending for Oct.
• PCE index for Oct.
• PCE (year-over-year)
• Core PCE index for Oct.
• Core PCE (year-over-year)
• Initial jobless claims for Oct. 26
• U.S. employment cost index for Q3
• Chicago PMI for Oct.
• U.S. employment report for Oct.
• U.S. unemployment rate for Oct.
• U.S. hourly wages for Oct.
• Hourly wages year over year
• S&P final U.S. manufacturing PMI for Oct.
• Construction spending for Sept.
• ISM manufacturing for Oct.
• Auto sales for Oct.

Markets Index Wrap-Up

Stock Markets

All of the major stock market indexes scored gains week-on-week as risk perception dropped. The 30-stock Dow Jones Industrial Average (DJIA) added 0.96% over the week which mirrored the performance of the Total Stock Market Index which likewise rose by 0.96%. The broad S&P 500 Index climbed by 0.85% with the Small Cap 600, Mid Cap 400, and Super Composite 1500 all sowing more than 1% gains. The technology-heavy Nasdaq Stock Market Composite advanced by 0.80% while the NYSE Composite climbed by 0.88%. The investor risk perception indicator, the CBOE Volatility Index (VIX) fell by 11.88%.

The utilities and real estate sectors fueled the advancement of the S&P 500 Index. Energy stocks tracked the pullback of oil prices that weakened as anticipation of possible Israeli attacks on Iran’s oil and gas infrastructure abated. Down the market cap spectrum, returns were stronger as evidenced by the outperforming of the small-cap Russell 2000 Index and the S&P MidCap 400 Index.

The Nasdaq Composite rallied during Friday’s trading session after lagging for much of the week. The buying interest was buoyed by strong quarterly earnings reports from Taiwan Semiconductor Manufacturing, a company that operates foundries that make advanced digital semiconductors. Excitement was reignited for artificial intelligence (AI)-related stocks in the Nasdaq. Other companies reported surprise results on the upside and spurred the technology-heavy index. An example is Netflix which grew its subscriber number and expanded its operating margins by more than expected in the third quarter.

U.S. Economy

The value of U.S. retail sales increased by 0.4% last month, accelerating from the 0.1% August reading, which is an encouraging sign for third-quarter economic growth. The September uptick of 0.4% was slightly higher than the consensus forecast of 0.3%. Strength in consumer spending was broad-based, as 10 of the 13 retailer categories reported higher sales for the month. A measure of retail sales that excluded auto dealerships, building materials, food services, and gas stations exhibited the fastest growth rate in three months, expanding by 0.7% from the preceding month. Industrial production fell by 0.3% in September after increasing by 0.3% in August. The final statistic for August was revised downward from an initial estimate of 0.8%. The weakness was attributed by the Federal Reserve to Hurricanes Francene and Helene together with a Boeing aircraft machinist strike.

In the first week of October, new applications for unemployment benefits spiked. This was partly brought about the damage and disruptions caused by Hurricane Helene in late September across several Southeastern States. During the week ended October 12, however, initial jobless claims fell unexpectedly to 241,000, constituting a decline of about 19,000 filings. The number of people receiving jobless benefit for more than one week rose by 9,000 to 1.867 million, which is short of the consensus estimate of 1.876 million.

Metals and Mining

Prices of gold and silver rallied above $2,700 and $33, respectively, in one of the quietest bull markets analysts have encountered. Because it was not clear to analysts who attended the London Bullion Market Association’s (LBMA) 2024 Precious Metals Conference in Florida who exactly was buying gold and silver at high prices, the sense of optimism brought about by the rally was not overly bullish. Analysts see gold prices rising to as high as $2,941 per ounce, but not quite above $3,000 per ounce before the end of 2024. But sentiments suggest that even at these record highs, there remains some potential upside. It is probably best that the advance is measured rather than euphoric, the latter usually accompanying a market peak. While the upcoming presidential election in the U.S. may mean that markets can peak at that point, the positive may not cool off immediately thereafter because whichever candidate wins, the geopolitical uncertainty is expected to remain elevated.

The spot price of precious metals recorded gains during the week. Gold, which ended last week at $2,656.59, closed this week at $2,721.46 per troy ounce for a gain of 2.44%. Silver began at the prior week’s close at $31.54 and ended this week at $33.72 per troy ounce to register an increase of 6.91%. Platinum came from $987.76 last week and closed this week at $1,015.31 per troy ounce for a gain of 2.79%. Palladium closed a week ago at $1,071.21 and this week at $1,084.09 per troy ounce to return 1.20% for the week. The three-month LME prices of industrial metals were mixed for the week. Copper lost by 1.00% for the week from its previous weekly close at $9,723.00 to close at $9,625.50 per metric ton. Aluminum ended one week ago at $2,586.00 and this week at $2,612.00 per metric ton for a gain of 1.01%. Zinc came from $3,086.50 one week ago to end this week at $3,089.50 per metric ton to realize a slight gain of 0.10%. Tin came from its prior closing price of $32,817.00 to end this week at $31,313.00 per metric ton for a decline of 4.58%.

Energy and Oil

As ICE Brent futures slid back to $79 per barrel, where it was last seen in early October, geopolitical risk premiums have slowly diminished from oil prices. Anticipation that Israel would launch retaliatory attacks against Iran sustained higher oil price levels, but coinciding with this wait was the slowdown of China’s economic growth to 4.6% in the third quarter of 2024. Furthermore, investors have been alerted to the downside of Chinese demand, the fifth consecutive month-over-month decline in Chinese refinery runs, which has deflated the bullish sentiment once more. In other news, the International Energy Agency (IEA) released a warning that world fossil fuel demand will hit its peak by the end of this decade. After it has done so, the surplus in fossil fuel supplies would enable it to spend more on renewables, which is seen as the start of the “age of electricity.”

Natural Gas

For the report week from Wednesday, October 9, to Wednesday, October 16, 2024, the Henry Hub spot price fell by $0.21 from $2.42 per million British thermal units (MMBtu) to $2.21/MMBtu. Concerning Henry Hub futures, the price of the November 2024 NYMEX contract decreased by $0.29, from $2.660/MMBtu at the start of the report week to $2.367/MMBtu by the week’s end. The price of the 12-month strip averaging November 2024 through October 2025 futures contracts fell by $0.19 to $2.945/MMBtu. At most major pricing locations, price changes ranged from a decrease of $0.70 at SoCal Citygate to an increase of $0.34 at the Waha Hub.

International natural gas futures prices climbed this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia advanced by $0.07 to a weekly average of $13.17/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.01 to a weekly average of $12.79/MMBtu. In the week last year that corresponded to this report week (the week beginning October 11 and ending October 18, 2023), the prices were $16.50/MMBtu in East Asia and $15.78/MMBtu at the TTF.

World Markets

The pan-European STOXX Europe 600 Index closed the week 0.58% higher in local currency terms as the markets were replete with expectations of a second consecutive interest rate cut by the European Central Bank (ECB) in furtherance of the easing of monetary policy. The major regional stock indexes advanced: France’s CAC 40 Index rose by 0.46%, Germany’s DAX gained 1.46%, and Italy’s FTSE MIB surged by 2.61%. The UK’s FTSE 100 Index added 1.27%. In line with expectations, the ECB cut its key deposit rate by a quarter of a percentage point to 3.25% in the first back-to-back rate reduction in 13 years. The disinflationary process was pronounced by ECB President Christine Lagarde to be “well on track” based on recent downside surprises in economic activity data. Financial markets appeared to expect the ECB to reduce rates in December to support the economy, although the ECB reiterated that it would not pre-commit to a particular rate path. According to the European Commission’s statistics office, the annual inflation came in at 1.7% in September. This is well below the ECB’s stated target of 2% and a downward revision from its initial estimate of 1.8%. The ECB does not expect the trend to be constant, however, as it forecasts that inflation will rise again before receding once more toward the 2% target next year.

Japan’s stock markets fell in local currency terms due to easing domestic inflation in September. While expected, this led to some speculation that the Bank of Japan (BoJ) may be less likely to raise interest rates again this year. The Nikkei 225 Index fell by 1.58% and the broader TOPIX lost 0.64%. BoJ officials observed that the prerequisite conditions for beginning monetary policy normalization have already been met, namely the breadth of items undergoing price increase as cited by BoJ Board Member Seiji Adachi. Nevertheless, rate hikes should be implemented at a very gradual pace. Adachi cautioned against a drastic change in policy given uncertainties surrounding the global economic outlook and domestic wage growth. The yield on the 10-year Japanese government bond rose to 0.97% from 0.94% at the end of the prior week. The yen weakened from the low to the high end of the JPY 149 range against the U.S. dollar. According to Japan’s top currency diplomat, Atsushi Mimura, recent moves in the yen were described as “somewhat one-sided and rapid.” The yen is once more trending towards levels where authorities intervened earlier in the year to stem the currency’s decline. Japan’s core consumer price index (CPI) indicated that inflation eased in September, although the country’s exports for that month declined from year-ago levels, the first decline in 10 months, due to weak Chinese demand.

China’s stocks rose in response to more support measures unveiled by the central bank after data indicated that deflationary pressures grew more entrenched in the economy. The Shanghai Composite Index advanced 1.36% in local currency terms while the blue-chip CSI 300 gained 0.98%. The Hong Kong benchmark Hang Seng Index fell by 2.11%. In the third quarter, China’s economy expanded by 4.6% year-on-year, exceeding consensus estimates. The growth rate was slightly lower than the second quarter expansion of 4.7% and continues to fall short of Beijing’s stated target of “around 5%.” The economy grew by 0.9% on a quarterly basis. Other economic data point to signs of improvement. In September, industrial production rose by a better-than-expected 5.4% from last year and up from 4.5% in August. Retail sales grew by 3.2% year-on-year which exceeded forecasts and further accelerated from the 2.1% growth recorded in August on the back of higher sales of household appliances, a major contributing factor. Annual inflation was at its lowest level in three months, registering 0.4% in September. This fell below consensus estimates and marked a slowdown from the August reading of 0.6%. Core inflation (excluding food and energy costs) increased by 0.1%, the lowest since February 2021. The producer price index dropped by a larger-than-expected 2.8% from last year, deepening from the 1.8% drop in August.

The Week Ahead

Included among the important economic reports scheduled for release this week are PMI data, new home sales, and final consumer sentiment for October.

Key Topics to Watch

• Dallas Fed President Lorie Logan speaks (Oct. 21)
• U.S. leading economic indicators for Sept.
• Kansas City Fed President Jeff Schmid speaks (Oct. 21)
• San Francisco Fed President Mary Daly speaks (Oct. 21)
• Philadelphia Fed President Patrick Harker speaks (Oct. 22)
• Fed Governor Michelle Bowman speaks (Oct. 23)
• Existing home sales for Sept.
• Fed Beige Book
• Initial jobless claims for Oct. 19
• Cleveland Fed President Beth Hammack opening remarks (Oct. 24)
• S&P flash U.S. services PMI for Oct.
• S&P flash U.S. manufacturing PMI for Oct.
• New home sales for Sept.
• Durable-goods orders for Sept.
• Durable-goods minus transportation for Sept.
• Consumer sentiment (final) for Oct.

 

Markets Index Wrap-Up

 

Stock Markets

All of the major stock market indexes scored gains week-on-week as risk perception dropped. The 30-stock Dow Jones Industrial Average (DJIA) added 0.96% over the week which mirrored the performance of the Total Stock Market Index which likewise rose by 0.96%. The broad S&P 500 Index climbed by 0.85% with the Small Cap 600, Mid Cap 400, and Super Composite 1500 all sowing more than 1% gains. The technology-heavy Nasdaq Stock Market Composite advanced by 0.80% while the NYSE Composite climbed by 0.88%. The investor risk perception indicator, the CBOE Volatility Index (VIX) fell by 11.88%.

The utilities and real estate sectors fueled the advancement of the S&P 500 Index. Energy stocks tracked the pullback of oil prices that weakened as anticipation of possible Israeli attacks on Iran’s oil and gas infrastructure abated. Down the market cap spectrum, returns were stronger as evidenced by the outperforming of the small-cap Russell 2000 Index and the S&P MidCap 400 Index.

The Nasdaq Composite rallied during Friday’s trading session after lagging for much of the week. The buying interest was buoyed by strong quarterly earnings reports from Taiwan Semiconductor Manufacturing, a company that operates foundries that make advanced digital semiconductors. Excitement was reignited for artificial intelligence (AI)-related stocks in the Nasdaq. Other companies reported surprise results on the upside and spurred the technology-heavy index. An example is Netflix which grew its subscriber number and expanded its operating margins by more than expected in the third quarter.

U.S. Economy

The value of U.S. retail sales increased by 0.4% last month, accelerating from the 0.1% August reading, which is an encouraging sign for third-quarter economic growth. The September uptick of 0.4% was slightly higher than the consensus forecast of 0.3%. Strength in consumer spending was broad-based, as 10 of the 13 retailer categories reported higher sales for the month. A measure of retail sales that excluded auto dealerships, building materials, food services, and gas stations exhibited the fastest growth rate in three months, expanding by 0.7% from the preceding month. Industrial production fell by 0.3% in September after increasing by 0.3% in August. The final statistic for August was revised downward from an initial estimate of 0.8%. The weakness was attributed by the Federal Reserve to Hurricanes Francene and Helene together with a Boeing aircraft machinist strike.

In the first week of October, new applications for unemployment benefits spiked. This was partly brought about by the damage and disruptions caused by Hurricane Helene in late September across several Southeastern States. During the week ended October 12, however, initial jobless claims fell unexpectedly to 241,000, constituting a decline of about 19,000 filings. The number of people receiving jobless benefit for more than one week rose by 9,000 to 1.867 million, which is short of the consensus estimate of 1.876 million.

Metals and Mining

Prices of gold and silver rallied above $2,700 and $33, respectively, in one of the quietest bull markets analysts have encountered. Because it was not clear to analysts who attended the London Bullion Market Association’s (LBMA) 2024 Precious Metals Conference in Florida who exactly was buying gold and silver at high prices, the sense of optimism brought about by the rally was not overly bullish. Analysts see gold prices rising to as high as $2,941 per ounce, but not quite above $3,000 per ounce before the end of 2024. But sentiments suggest that even at these record highs, there remains some potential upside. It is probably best that the advance is measured rather than euphoric, the latter usually accompanying a market peak. While the upcoming presidential election in the U.S. may mean that markets can peak at that point, the positive may not cool off immediately thereafter because whichever candidate wins, the geopolitical uncertainty is expected to remain elevated.

The spot price of precious metals recorded gains during the week. Gold, which ended last week at $2,656.59, closed this week at $2,721.46 per troy ounce for a gain of 2.44%. Silver began at the prior week’s close at $31.54 and ended this week at $33.72 per troy ounce to register an increase of 6.91%. Platinum came from $987.76 last week and closed this week at $1,015.31 per troy ounce for a gain of 2.79%. Palladium closed a week ago at $1,071.21 and this week at $1,084.09 per troy ounce to return 1.20% for the week. The three-month LME prices of industrial metals were mixed for the week. Copper lost by 1.00% for the week from its previous weekly close at $9,723.00 to close at $9,625.50 per metric ton. Aluminum ended one week ago at $2,586.00 and this week at $2,612.00 per metric ton for a gain of 1.01%. Zinc came from $3,086.50 one week ago to end this week at $3,089.50 per metric ton to realize a slight gain of 0.10%. Tin came from its prior closing price of $32,817.00 to end this week at $31,313.00 per metric ton for a decline of 4.58%.

Energy and Oil

As ICE Brent futures slid back to $79 per barrel, where it was last seen in early October, geopolitical risk premiums have slowly diminished from oil prices. Anticipation that Israel would launch retaliatory attacks against Iran sustained higher oil price levels, but coinciding with this wait was the slowdown of China’s economic growth to 4.6% in the third quarter of 2024. Furthermore, investors have been alerted to the downside of Chinese demand, the fifth consecutive month-over-month decline in Chinese refinery runs, which has deflated the bullish sentiment once more. In other news, the International Energy Agency (IEA) released a warning that world fossil fuel demand will hit its peak by the end of this decade. After it has done so, the surplus in fossil fuel supplies would enable it to spend more on renewables, which is seen as the start of the “age of electricity.”

Natural Gas

For the report week from Wednesday, October 9, to Wednesday, October 16, 2024, the Henry Hub spot price fell by $0.21 from $2.42 per million British thermal units (MMBtu) to $2.21/MMBtu. Concerning Henry Hub futures, the price of the November 2024 NYMEX contract decreased by $0.29, from $2.660/MMBtu at the start of the report week to $2.367/MMBtu by the week’s end. The price of the 12-month strip averaging November 2024 through October 2025 futures contracts fell by $0.19 to $2.945/MMBtu. At most major pricing locations, price changes ranged from a decrease of $0.70 at SoCal Citygate to an increase of $0.34 at the Waha Hub.

International natural gas futures prices climbed this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia advanced by $0.07 to a weekly average of $13.17/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands, the most liquid natural gas market in Europe, increased by $0.01 to a weekly average of $12.79/MMBtu. In the week last year that corresponded to this report week (the week beginning October 11 and ending October 18, 2023), the prices were $16.50/MMBtu in East Asia and $15.78/MMBtu at the TTF.

World Markets

The pan-European STOXX Europe 600 Index closed the week 0.58% higher in local currency terms as the markets were replete with expectations of a second consecutive interest rate cut by the European Central Bank (ECB) in furtherance of the easing of monetary policy. The major regional stock indexes advanced: France’s CAC 40 Index rose by 0.46%, Germany’s DAX gained 1.46%, and Italy’s FTSE MIB surged by 2.61%. The UK’s FTSE 100 Index added 1.27%. In line with expectations, the ECB cut its key deposit rate by a quarter of a percentage point to 3.25% in the first back-to-back rate reduction in 13 years. The disinflationary process was pronounced by ECB President Christine Lagarde to be “well on track” based on recent downside surprises in economic activity data. Financial markets appeared to expect the ECB to reduce rates in December to support the economy, although the ECB reiterated that it would not pre-commit to a particular rate path. According to the European Commission’s statistics office, the annual inflation came in at 1.7% in September. This is well below the ECB’s stated target of 2% and a downward revision from its initial estimate of 1.8%. The ECB does not expect the trend to be constant, however, as it forecasts that inflation will rise again before receding once more toward the 2% target next year.

Japan’s stock markets fell in local currency terms due to easing domestic inflation in September. While expected, this led to some speculation that the Bank of Japan (BoJ) may be less likely to raise interest rates again this year. The Nikkei 225 Index fell by 1.58% and the broader TOPIX lost 0.64%. BoJ officials observed that the prerequisite conditions for beginning monetary policy normalization have already been met, namely the breadth of items undergoing price increase as cited by BoJ Board Member Seiji Adachi. Nevertheless, rate hikes should be implemented at a very gradual pace. Adachi cautioned against a drastic change in policy given uncertainties surrounding the global economic outlook and domestic wage growth. The yield on the 10-year Japanese government bond rose to 0.97% from 0.94% at the end of the prior week. The yen weakened from the low to the high end of the JPY 149 range against the U.S. dollar. According to Japan’s top currency diplomat, Atsushi Mimura, recent moves in the yen were described as “somewhat one-sided and rapid.” The yen is once more trending towards levels where authorities intervened earlier in the year to stem the currency’s decline. Japan’s core consumer price index (CPI) indicated that inflation eased in September, although the country’s exports for that month declined from year-ago levels, the first decline in 10 months, due to weak Chinese demand.

China’s stocks rose in response to more support measures unveiled by the central bank after data indicated that deflationary pressures grew more entrenched in the economy. The Shanghai Composite Index advanced 1.36% in local currency terms while the blue-chip CSI 300 gained 0.98%. The Hong Kong benchmark Hang Seng Index fell by 2.11%. In the third quarter, China’s economy expanded by 4.6% year-on-year, exceeding consensus estimates. The growth rate was slightly lower than the second quarter expansion of 4.7% and continues to fall short of Beijing’s stated target of “around 5%.” The economy grew by 0.9% on a quarterly basis. Other economic data point to signs of improvement. In September, industrial production rose by a better-than-expected 5.4% from last year and up from 4.5% in August. Retail sales grew by 3.2% year-on-year which exceeded forecasts and further accelerated from the 2.1% growth recorded in August on the back of higher sales of household appliances, a major contributing factor. Annual inflation was at its lowest level in three months, registering 0.4% in September. This fell below consensus estimates and marked a slowdown from the August reading of 0.6%. Core inflation (excluding food and energy costs) increased by 0.1%, the lowest since February 2021. The producer price index dropped by a larger-than-expected 2.8% from last year, deepening from the 1.8% drop in August.

The Week Ahead

Included among the important economic reports scheduled for release this week are PMI data, new home sales, and final consumer sentiment for October.

Key Topics to Watch

• Dallas Fed President Lorie Logan speaks (Oct. 21)
• U.S. leading economic indicators for Sept.
• Kansas City Fed President Jeff Schmid speaks (Oct. 21)
• San Francisco Fed President Mary Daly speaks (Oct. 21)
• Philadelphia Fed President Patrick Harker speaks (Oct. 22)
• Fed Governor Michelle Bowman speaks (Oct. 23)
• Existing home sales for Sept.
• Fed Beige Book
• Initial jobless claims for Oct. 19
• Cleveland Fed President Beth Hammack opening remarks (Oct. 24)
• S&P flash U.S. services PMI for Oct.
• S&P flash U.S. manufacturing PMI for Oct.
• New home sales for Sept.
• Durable-goods orders for Sept.
• Durable-goods minus transportation for Sept.
• Consumer sentiment (final) for Oct.

Markets Index Wrap-Up

Stock Markets

The bull market continues as major indices rose through this week. The 30-stock Dow Jones Industrial Average (DJIA) added 1.21% while the Total Stock Market Index gained 1.17%. The broad S&P 500 likewise climbed by 1.11% and the technology-heavy Nasdaq Stock Market Composite rose by 1.13%. The NYSE Composite inched up by 0.88% and the Russell 1000, 2000, and 3,000 all ended higher for the week. The CBOE Volatility Index, the indicator of investor risk perception, rose by 6.51%.

This past week marks the two-year anniversary of the present bull market during which time stocks gained around 60%.  Historically, returns tend to moderate as bull markets make it to the end of the third year. This may likewise happen with this bull market since fundamental conditions remain strong but are tending to slow down. The Federal Reserve is expected to continue with its easing campaign even though September inflation came in slightly hotter than expected. It is more likely that quarter-point rate cuts will be decided on at each meeting until the Fed policy approaches 3% 5o 3.5%. However, earnings will have to push any future market gains since valuation have limited room to increase further. Signs of earnings broadening are expected to become evident as the third quarter season kicks off.

U.S. Economy

There has been several disappointing economic news over the weekend. The Labor Department reported on Thursday some modest some upside movements in headline and core (excluding food and energy) inflation which rose in September by 0.2% and 0.3% respectively, both slightly above expectations. Core prices rose by 3.3% year-over-year in September compared to 3.2% in August, the first increase since March 2023. Medical care (up 0.7%) and transportation (up 1.4%) services registered sharp increases in their seasonally-adjusted prices, which offset a 1.9% drop in energy prices.

The Labor Department also reported on Thursday a surprise jump in weekly jobless claims to its highest level in 14 months at 258,000. Partly to blame were disruptions by Hurricane Helene, however, Michigan also recorded substantial job losses. Continuing claims also rose to 1.86 million, their highest level since late July. This may have influenced the University of Michigan’s preliminary gauge of consumer sentiment in October which declined unexpectedly as respondents to the survey expressed greater caution about their personal finances.

The surprise increase in consumer inflation led to a significant change in expectations about the Fed’s next policy meeting in November. The futures market ended the week pricing in a respectable 14.1% likelihood that the Fed will hold rates steady. Minutes from the Fed’s October meeting, which were released on Wednesday, likewise revealed that some members favored on a 25-basis-point rate cut, compared to a 50-basis-point cut.

Metals and Mining

Gold’s price action continues to remain bullish despite being mostly ignored by generalist investors. Shallow corrections are consistently bought resulting in the yellow metal continuing to defy the odds. According to analysts, gold investors are justified in taking profits as expectations around the monetary policy actions of the Federal Reserve continue to vacillate. Last Friday, the market’s expectation of a 50-basis-point cut next month was dramatically doused by a stellar jobs report. This week, it was reported that consumer inflation rose more than expected as the core Consumer Price Index increased by 3.2% year-on-year, causing monetary policy doves to take another hit. Despite the hawkish news, analysts have noted that the gold market is delinking from single monetary policy decisions and growing much bigger. While a 50-basis-point but remains out of the question, it is evident the Fed will continue to ease interest rates even if the inflation rate remains high.

The spot prices of precious metals ended mixed week-on-week. Gold rose by 0.11% from last week’s close at $2,653.60 to this week’s close at $2,656.59 per troy ounce.  Silver ended 2.05% lower from its last traded price of $32.20 one week ago to its last traded price this week at $31.54 per troy ounce. Platinum lost 0.48% from its close last week at $992.55 to its close this week at $987.76 per troy ounce. Palladium surged by 5.73% from its ending price last week at $1,013.11 to its ending price this week at $1,071.21. The three-month LME prices of base metals have mostly come down. Copper, which closed last week at $9,866.00, ended this week at $9,723.00 per metric ton for a loss of 1.45%.  Aluminum, which ended at $2,629.00 the prior week, ended this week at $2,586.00 per metric ton for a decline of 1.64%.  Zinc settled this week at $3,086.50 per metric ton, 1.20% lower than last week’s closing price of $3,124.00. Tin closed this week at $32,817.00 per metric ton, 2.65% below last week’s close at $33,709.00.

Energy and Oil

Brent futures were nudged lower by some of the disappointment that an Israeli retaliatory strike on Iran, which the market anticipated all week, failed to materialize. Brent futures settled this week just below the $79-per-barrel mark. The oil-related impacts of Hurricane Milton were relatively minor despite the devastation the storm wreaked on Florida. Macroeconomics played a more robust role in influencing prices this week, particularly on the back of U.S. inflation dipping to an annual rate of 2.4%.  In other parts of the world, A UK oil major signaled a $500 million decline in refining margins and a weak performance from oil trading into its third-quarter earnings. Its rival company Shell quantified the decline in refining margins at 30% quarter-on-quarter, down to $5.5 per barrel compared to $7.7 per barrel in the second quarter.

Natural Gas

For the report week from Wednesday, October 2, to Wednesday, October 9, 2024, the Henry Hub spot price fell by $0.34, from $2.76 per million British thermal units (MMBtu) to $2.42/MMBtu. Regarding Henry Hub futures, the price of the November 2024 NYMEX contract decreased by $0.23, from $2.886/MMBtu at the start of the report week to $2.660/MMBtu by the week’s end. The price of the 12-month strip averaging November 2024 through October 2025 futures contracts declined by $0.12 to $3.130/MMBtu.

Concerning regional markets, natural gas spot price changes were mixed this report week. Prices rose in the Northeast but fell in most other major pricing locations. Price changes ranged from a decrease of $2.64 at the Wahu Hub to an increase of $0.48 at Algonquin Citygate.

International natural gas futures price changes were mixed this report week. The weekly average front-month futures prices for liquefied natural gas (LNG) cargoes in East Asia decreased by $0.06 to a weekly average of $13.10/MMBtu. Natural gas futures for delivery at the Title Transfer Facility (TTF) in the Netherlands increased by $0.20 to a weekly average of $12.78/MMBtu. In the week last year that corresponds to this report week (from October 4 to October 11, 2023) the prices were $14.18/MMBtu in East Asia and $13.28/MMBtu at the TTF.

World Markets

European equities were up, albeit modestly, for the week as the pan-European STOXX Europe 600 Index closed 0/66%. The market continued to hope that the European Central Bank (ECB) would proceed more quickly to cut interest rates and that China is set to enhance its economic stimulus, The major continental stock indexes were elevated as Italy’s FTSE MIB added 2.13%, Germany’s DAX rose by 1.32%, and France’s CAC 40 Index gained by 0.48%. However, the UK’s FTSE 100 Index lost by 0.33%. More ECB officials foresee that inflation may slow closer to the 2% target by the end of 2024, as indicated in the minutes from the September meeting. If incoming inflation data points align with the ECB’s projections, the central bank noted that a gradual reduction of borrowing costs would be appropriate. Nevertheless, policymakers refuse to commit to a particular rate path, although based on recent comments from ECB officials, they appeared to align with the market’s view that the pace of policy easing could quicken if inflation slows and the economy weakens.

Japanese stock indexes climbed over the week. The Nikkei 225 rose by 2.45% while the broader TOPIX Index gained by 0.45%, largely due to the weakness in the yen that provided a favorable profit outlook for Japanese exporters. The exchange rate floated close to its lowest level since August at about the high JPY 148 level against the US dollar. Earlier this month, the new prime minister, Shigeru Ishiba, brought the yen came under pressure when he cautioned that the environment is not ready for another interest rate hike. The 10-year Japanese government bond (JGB) yields rose in tandem with U.S. Treasury yields. Investors’ expectations around the likelihood of another aggressive (50-basis-point) rate cut by the Federal Reserve in November moderated. From 0.87% at the end of the prior week, the yield on the 10-year JGB rose to 0.94%.  Regarding its economy, Japan’s real wages (wages adjusted for inflation) fell by 0.6% year-on-year in August. The first decline in three months was brought about partly due to the diminishing impact of higher bonuses paid in the preceding two months. However, since the positive cycle wherein rising wages boost consumer spending has not yet come about, the sluggishness in the pay trend could lend some support to the view that the Bank of Japan (BoJ) may avoid raising interest rates again anytime soon. While the August household spending declined by 1.9% year-on-year, the drop was less than the consensus forecast of 2.6%.

During the holiday-shortened week, Chinese equities fell as optimism about the most recent stimulus measure faded. The Shanghai Composite Index lost by 3.56% and the blue-chip CSI 300 shed 3.25%. The Hong Kong benchmark Hang Seng Index gave up 6.53%. The markets in the mainland were closed on Monday for the National Day holiday that started on Tuesday, October 1.  At a press conference on Tuesday, the country’s economic planning agency, the National Development and Reform Commission, announced that China would speed up countercyclical measures to support growth. The announcement reiterated for the most part plans to boost investment and increase direct support to low-income groups and fresh graduates. Towards this end, the central government will continue ultra-long special bonds in 2025 for the purpose of funding major projects. Officials stated that Beijing will invest RMB 100 billion in strategic areas. In the meantime, over the long holiday that ended on Monday, spending by Chinese consumers failed to rise to pre-pandemic levels. Spending increased by 6.3% year-on-year while passenger traffic rose by 5.9%. Box office sales amounted to RMB 2.1 billion, lower than the RMB 2.7 billion reported last year. However, the average spending per trip was roughly RMB 131, which was higher than the RMB 113 recorded during the five-day Labor Day in May.

The Week Ahead

The CPI inflation data, import price index data, and an analysis of consumer sentiment are among the important economic releases this coming week.

Key Topics to Watch

• Columbus Day holiday. Bond market closed. (October 14)
• Federal Reserve Governor Christopher Waller speaks (October 14)
• Empire State manufacturing survey for Oct.
• Fed Governor Adriana Kugler speaks (October 15)
• Import price index for Sept.
• Import price index minus fuel for Sept.
• Initial jobless claims for Oct. 12
• S. retail sales for Sept.
• Retail sales minus autos for Sept.
• Industrial production for Sept.
• Capacity utilization for Sept.
• Business inventories for Aug.
• Home builder confidence index for Oct.
• Housing starts for Sept.
• Building permits for Sept.
• Federal Reserve Governor Christopher Waller speaks (October 18)

Markets Index Wrap-Up