On Friday, the Dow ended trading with a solid daily gain of +2.47% at 31,082.56 points. On a weekly basis, the leading index thus gained almost +5%. The S&P 500 gained +2.37% at the end of last week and exited Friday trading at 3,752.75 points – weekly balance +4.7%. On the Nasdaq technology exchange, the indices also made strong gains of around +2.4% on Friday, posting an impressive +5.8% gain for the week. The movements are particularly impressive against the backdrop of the recent rise in bond yields. The benchmark ten-year US Treasury bond yield moved up to 4.33% at times on Friday, reaching its highest level since 2007, but then eased back to a current 4.15% before the weekend.
Stocks in the Asia-Pacific region trended mixed on Monday. In Hong Kong, the Hang Seng Index lost around -5% in the shadow of the 20th National Congress of the Communist Party of China, with the Hang Seng Tech Index plunging more than -6%. In contrast, mainland Chinese markets traded only moderately in negative territory thanks to better-than-expected economic data. The Shanghai Composite lost around -0.9%. In Tokyo, the Nikkei 225 rose by about +0.5%. Meanwhile, the MSCI index for Asia-Pacific equities outside Japan declined by about -1.2%.
China's economy grew again significantly stronger in the third quarter compared to the same quarter of the previous year by +3.9% and thus also stronger than analysts had anticipated at +3.4%. Retail sales missed expectations and were +2.5% higher year-on-year in September, while industrial production positively surprised at +6.3%, stronger than the consensus of +4.5%.
After the Japanese yen fell against the US dollar last week to just under 152 for the first time since 1990, market intervention by the Japanese Ministry of Finance provided some stabilization. The yen's rise triggered market speculation that Japan's government may have again intervened in the foreign exchange market. In the run-up, Japan's Finance Minister Shunichi Suzuki had affirmed that appropriate measures would be taken against speculative movements, and the business newspaper “Nikkei” was convinced that the government had intervened in the foreign exchange market. Stopping the yen's decline, however, is likely to be difficult because of the Bank of Japan's still ultra-loose monetary policy.
Following the resignation of Prime Minister Liz Truss on Thursday, the candidate merry-go-round is spinning in the United Kingdom. Former Finance Minister Rishi Sunak and former Defense Minister Penny Mordaunt are currently considered the most promising successors to Truss. Meanwhile, former Prime Minister Boris Johnson withdrew his candidacy on Sunday evening. Meanwhile, the opposition Labour Party is calling for new elections. The uncertain political situation again weighed on British bond markets on Friday, causing bond yields to rise.
The German economy is likely to be on the verge of a recession. This is the conclusion of the Bundesbank in its monthly report for October. “Persistently high inflation and uncertainty about energy supplies and their costs are clearly weighing on the German economy,” the report says. The Bundesbank therefore expects the economy to cool down significantly in the winter half-year. Thanks to the robust development in the first half of the year, Germany could nevertheless report economic growth for the year. With a view to high inflation, economists remain pessimistic and expect consumer prices to continue to grow in double digits in the coming months. Annual inflation in Germany is currently +10%. According to the Bundesbank, the only bright spot is the labor market, where demand for workers is high and is likely to remain so even in the event of an economic slowdown.
|10:00||China||Exports (September, y/y)||+7.1%|
|10:00||China||Imports (September, y/y)||+0.3%|
|10:00||EZ||PMI Manufacturing (October)||48.4|
|15:45||US||PMI Manufacturing (October)||52.0|
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: David Wolf, E-Mail: email@example.com
Source: LGT Bank (Switzerland) Ltd.
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