Global markets cautious ahead of key Inflation Report

US markets closed near the flatline on Monday as investors awaited today’s inflation report. Moody’s recent shift in the US credit rating outlook to negative from stable, citing a higher interest rate environment and political dysfunction, initially led to pressure on equities and a rise in Treasury yields. Energy shares performed well with oil prices rebounding, while health care and consumer staples also saw gains. Technical indicators suggest a bullish stance, with the S&P 500 closing above 4,400 and its 100-day moving average, though potential market volatility is anticipated pending the inflation release. Meanwhile, European shares rebounded in a broad-based rally yesterday, with the Euro Stoxx 50 closing 0.8% higher as Italian banks surged and energy shares rose.  

Summary for 14.11.2023 

• Most Asian equities showed slight gains on Tuesday, rebounding from recent losses as investors look ahead to highly anticipated talks between the US and China and US inflation data. However, Chinese markets lagged due to concerns over economic slowdown, particularly in the technology sector while South Korea’s Kospi led the gains, rising over 1%.  
• European shares are set for a flat start, mirroring flat US equity futures, as investors await the crucial US inflation report, with market attention on potential impacts on economic and monetary policy outlooks. 
• Oil prices edged higher this morning, supported by an OPEC report emphasising strong demand and concerns of potential disruptions in Russian oil exports due to a US crackdown. The market found some support after a recent sell-off, with OPEC attributing the drop to financial market speculators and expressing optimism about global demand growth in 2023. 
• UK Prime Minister Rishi Sunak’s unexpected appointment of former Prime Minister David Cameron as foreign secretary has sparked controversy within the Conservative Party. Discussions among party members, especially on the right, include consideration of potential actions, such as attempts to remove Sunak from office before the next general election.  
• Global electric vehicle (EV) sales remain robust, with China reporting record monthly sales in October despite the end of subsidies. The global EV market showed a 34% growth year-to-date, with China experiencing a 29% increase in EV sales in September, while North America saw a 79% rise in EV sales so far this year. 
• A federal judge in Illinois has allowed over 8,000 claims to proceed in multidistrict litigation against L’Oreal USA, Revlon, and other companies accused of producing cancer-causing chemical hair relaxer products, rejecting most dismissal arguments, including claims of negligence and defective design. The lawsuit alleges failure to warn consumers adequately about the risks associated with the products, particularly those marketed to women of colour. 
• Nvidia has announced the H200, an upgraded chip for artificial intelligence (AI) with increased high-bandwidth memory, set to roll out in 2023. The new chip, succeeding the H100, is expected to generate output at almost twice the rate of the current chip, and major cloud service providers such as Amazon, Google, and Oracle will be among the first to offer access to H200 chips. 
• Boeing shares rose 4% on Monday after reports indicated that China is considering ending its freeze on purchases of Boeing’s 737 MAX aircraft, potentially resuming orders during the APEC summit this week. Additionally, Boeing secured orders for 125 widebody jets worth over $50 billion from Emirates and flydubai at the Dubai Airshow, contributing to the positive momentum in the equity. 
• JBS SA, the world’s largest meatpacker, reported an 86% drop in Q3 net income to approximately $116.63 million, attributing the decline to challenges in key business divisions such as lower US pork prices, reduced beef margins due to limited cattle herds, and a global chicken oversupply affecting its Seara processed foods division. Despite adjusted EBITDA surpassed estimates, net revenues were down 7.6% year-on-year. 
• Stifel analysts upgraded CrowdStrike holdings to Buy from Hold, citing the company’s position as a leading provider of endpoint security software and services, its high-efficacy cloud-based endpoint technology, and its strategic expansion into a broader cybersecurity platform. The analyst set a new price target of $225 per share, resulting in a 2.4% increase in CrowdStrike share price.