PRESIDENTIAL
Last week, equities were led lower by big tech companies as earnings from Microsoft and Meta disappointed. Stocks pared some losses on Friday after a weaker than expected US job additions in October. Overall though, still strong US data pushed bond yields higher.
This week, focus is set to be on the US election (Tuesday). Results are expected on Wednesday/Thursday, but there may still be some uncertainty around the final result of a potentially very close race. For once, the Fed's decision (Thursday), with a 25bps cut to 4.50-4.75% expected, could take a back seat!
Q3 GDP in the US and the Eurozone were strong. That for the US rose by 2.8% q/q annualised, aided by robust consumption, investment and government spending. Eurozone GDP grew by 0.4% q/q, double the rate in Q2, as German activity rebounded from a contraction and French growth accelerated.
US non-farm payrolls were weak in October, with just 12K jobs added compared to market expectations of 100K and down from 223K in September amid the impact of hurricanes and strikes.
However, other data suggested a still healthy labour market in the US. Unemployment remained low at 4.1% and average hourly earnings rose by 4.0% y/y in October.
Last week, the S&P 500 fell by 1.4%, while the Euro Stoxx 600 was down by 1.5%. Disappointing earnings from the likes of Microsoft and Meta pushed stocks lower for most of the week.
On Friday, stocks pared some of those losses as a weaker US job additions suggested that the Fed might need to reduce interest rates by more than previously expected.
Bond yields rose (bond prices fall as bond yields rise) last week as overall strong data from GDP to low unemployment supported the case for rates to remain higher to prevent excessive inflationary pressures building.
The 10-year US Treasury yield was up by 13bps to 4.37%, while the equivalent German bund rose by 10bps to 2.39%.
- Mon 4th US - Durable good, factory orders
- Tue 5th US - Presidential election, ISM services
- Wed 6th US - Q3 GDP • Germany - Manufacturing orders
- Thu 7th US - Fed meeting, initial jobless claims • Eurozone - Retail sales • Germany - Industrial production
- Fri 8th US - Consumer sentiment
This is intended as a general review of investment market conditions. It does not constitute investment advice and has not been prepared based on the financial needs or objectives of any particular person.