Shares muted after strong week

US equities had a relatively flat day yesterday after a strong week where the S&P 500, Dow and Nasdaq rallied more than 5%, driven by lower bond yields and positive signals from the Fed and employment report. Bond yields rebounded, with ten-year rates rising back above 4.6%, but still below recent highs above 5%. European shares also remained subdued on Monday, with some indices rising and others faced losses amid global economic uncertainties.  

Summary for 07.11.2023 

• Asian equities retreated as concerns over China’s economic headwinds and signals of a potential continued rate hike cycle by the Federal Reserve prompted profit-taking, with South Korea’s Kospi down 3% and other regional markets experiencing losses. Weaker Chinese trade data and lingering uncertainty weighed on investor sentiment in the region. 
• European equities are set for a stable open as traders adjust their expectations for Fed policy, while US futures eased following gains in yesterday’s session. 
• Oil prices decline in Asian trade due to a stronger dollar and concerns about weaker oil demand, influenced by disappointing Chinese trade data. Despite supply commitments from Saudi Arabia and Russia, and the US plan to refill the Strategic Petroleum Reserve a rebounding dollar and uncertainty about crude demand put downward pressure on prices. 
• Chinese trade data for October showed a larger-than-expected decline in exports, resulting in a narrowing trade surplus to its worst level in 17 months. Import levels grew unexpectedly, but the drop in exports and trade balance shrinkage indicated weakened demand in China’s major export destinations and posed economic challenges for the country as conditions in its key markets worsen.  
• The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.35% in November, the 13^th rate increase since May 2022, in response to persistent inflation. The central bank’s new governor, Michelle Bullock, emphasised that future tightening will depend on data and risk assessment while monitoring the global economy, domestic demand, and inflation and labour market trends. 
• UK retail sales increased by 2.6% in October compared to the previous year, showing a slight slowdown from September’s 2.8% growth due to higher costs affecting consumer confidence and households savings for Christmas and increased fuel bills. Despite the slowdown, this figure exceeded expectations, with consumers hoping to find deals during Black Friday sales. 
• Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, has urged caution on declaring victory over inflation, despite some positive signs of easing price pressures. He emphasise the need to wait for more data to confirm if inflation is truly under control. Additionally, a recent Fed survey of lending officers indicated that banks maintained tight lending standards and faced weak loan demand during the third quarter. 
• WeWork, the office-sharing startup supported by SoftBank Group, filed for bankruptcy protection in the US on Monday. This move comes as WeWork faced financial challenges due to its investments in companies that didn’t yield the expected results. 
• Ryanair yesterday forecasted a record annual profit and announced its intention to pay a regular dividend, leading to a 5.8% surge in its shares. The company expects an after-tax profit of €1.85 billion to €2.05 billion for the year ending March, driven by strong growth and high summer airfares, with plans to pay a €400 million regular dividend next year and return about 25% of after-tax profit through ordinary dividends in the future. 
• Booking Holding 3.9% on Monday after D.A. Davidson upgraded the online travel company’s shares to “buy” and added it to its list of top picks. It has a price target of $3,400 on the company’s shares. 
• Tesla plans to manufacture a €25,000 car at its Berlin factory, aiming to achieve broader adoption of its electric vehicles, according to an unnamed source, with no specific production start date provided.