Post-Thanksgiving Caution in Markets

With US markets closed for Thanksgiving, European shares rose on Thursday, with the Stoxx 50 index gaining 0.2% to reach a three-month high. Energy shares led the gains despite a pullback in oil prices, recovering from two consecutive sessions of sharp losses, while healthcare equities rose, supported by Novo Nordisk’s announcement of a $2.3 billion investment to boost production of its weight-loss and diabetes drugs.

Summary for 24.11.2023

Most Asian markets experienced a decline this morning, with the Hang Seng leading the losses, largely attributed to a significant slump in shares of luxury goods retailer Chow Tai Fook Jewellery. Weak economic signals from Japan and the euro zone, along with uncertainty over US interest rates and concerns about slowing demand for luxury goods in China, contributed to the overall subdued sentiment in the region.

Futures indicate European bourses are set for a muted open and with a bare economic calendar, markets are likely to drift as holiday season kicks off.

Oil markets faced volatility as WTI crude futures steadied above $76 per barrel on Friday, influenced by disputes among OPEC+ members over output quotas, contributing to uncertainty in the supply outlook. The postponement of the OPEC+ meeting, concerns over disagreements on output levels among members, and signs of robust supplies, including a significant increase in US crude inventories, added pressure on oil prices, leading to a nearly 5% drop on Wednesday.

In October, Japan’s core consumer inflation slightly missed expectations at 2.9%, but remained well above the Bank of Japan’s 2% target for the 19th consecutive month. The headline consumer price index grew by 3.3%, reflecting surging import costs and a dovish BOJ policy, while concerns about slowing growth in major export destinations, especially China, added headwinds to the Japanese economy.

The euro zone’s business activity showed signs of easing in November, with the PMI ticking up to 47.1 from October’s low but still below the 50-mark indicating contraction, suggesting the bloc’s economy may contract again the Q4 as consumer spending remains restrained. Despite slight improvements in Germany, the overall weakness in the euro zone’s business surveys raises concerns of an impending recession, with manufacturing struggling and services continuing to contract.

The latest minutes from the European Central Bank’s October meeting reveal a steadfast approach to monetary policy adjustments, emphasising a commitment to flexibility and the possibility of further rate hikes if needed to reach the bank’s inflation target by 2025. Despite acknowledging heightened economic uncertainty and persistent domestic inflation, policymakers expect inflation to stabilise within the next two years, maintaining a resolute stance on restrictive monetary measures.

Apple witnessed a 4% drop in smartphone sales during China’s Singles Day, while Huawei and Xiaomi recorded 66% and 28% increases, respectively contributing to a 5% overall rise in Chinese smartphone sales. Analysts cite supply chain issues and heightened competition during the shopping festival.

Workers and activists across Europe plan to disrupt Amazon’s operations on Black Friday, with strikes in Germany, the UK, and Italy, and protests targeting Amazon parcel lockers in France. The demonstrations aim to demand better wages, collective agreements, and highlight concerns about overconsumption, part of a global “Make Amazon Pay” campaign involving strikes and protests in more than 30 countries.

Barclays is working on plans to reduce costs by as much as £1 billion over several years, which could involve slashing as many as 2,000 jobs. Any cuts would be primarily at Barclays Execution Services, the unit that encompasses the group’s back office. The moves to boost profitability could see 1,500 to 2,000 jobs shed if implemented in full or about 2% of the bank’s workforce.

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