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US Thanksgiving Market pause brings inflation worries

ECB Signals and Asian Market Responses

Thursday’s market focus in Europe revolves around the European Central Bank’s (ECB) October meeting minutes and the release of flash Purchasing Managers’ Index (PMI) figures for various European nations. The global outlook hinges on the forward-looking November PMIs, crucial for investors to gauge recession risks and anticipate potential rate cuts. Alarming signals are evident in the Eurozone and Britain, where PMIs are below the critical 50-mark, indicating economic contraction. Similarly, the U.S. October manufacturing PMI has sharply contracted.

European Market Dynamics

Investors globally adopt a rumor-and-fact strategy regarding the ECB, reflecting a dovish bias. Interest rate futures suggest anticipated rate cuts by April, intensifying in June. However, the Thanksgiving period advises caution, emphasizing the volatility associated with holiday trading.

ECB’s communication adds complexity to market predictions, with dovish statements from Mario Centeno, Joachim Nagel’s remarks on rates nearing their peak, and Christine Lagarde’s caution against premature celebration. Concurrently, Sweden faces a closely anticipated central bank policy decision, with expectations divided on whether to implement a rate hike.

UK Financial Landscape

In the UK, finance minister Jeremy Hunt’s autumn budget receives a tepid response from sterling and the FTSE 100. Investors react to the economic outlook, questioning Hunt’s pre-election maneuvers and the potential repercussions of unfunded tax cuts, leading to increased gilt yields. Overall, global markets navigate a landscape of economic indicators, central bank decisions, and geopolitical considerations during this holiday period.

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Asian Market Variances

Thursday’s Asian market trends reflected a mixed picture following Wall Street’s modest gains, while closures in Japan and the US set a quieter tone. Oil prices dipped as OPEC delayed discussions on production cuts, intending to sustain a controlled crude oil market despite prices falling from their summer highs near $100 a barrel.

Hong Kong’s Hang Seng experienced a 0.4% decline, while China’s Shanghai Composite edged up by 0.2%, reacting to Chinese regulators’ efforts to stabilize the struggling property market. Troubled developer Country Garden saw a 13% surge in shares amid potential financing support, while Sino-Ocean Group Holding soared by 18%.

Australia’s S&P/ASX 200 dropped 0.6%, South Korea’s Kospi slipped marginally, and Bangkok’s SET fell by 0.4%. Meanwhile, the Taiex in Taiwan dipped by 0.2%, and Mumbai’s Sensex opened with a slight 0.1% increase.

US Market Movements

Wednesday witnessed the S&P 500 rising to 4,556.62, with the Dow and Nasdaq also gaining ground. Tech and communication stocks, including Microsoft and Alphabet, contributed to S&P 500 gains. Yet, Broadcom’s 0.9% slip came as it finalized a $69 billion deal to acquire VMWare.

Treasury yields remained relatively stable, with the consumer sentiment survey indicating strong confidence. Recession predictions shifted to 2024, and expectations of a Fed rate cut grew amidst easing inflation and solid consumer spending. However, Fed officials maintain a cautious outlook, awaiting more data on the economy’s trajectory.

Oil and Currency Movements

Oil price declines impacted energy companies like Exxon Mobil and Halliburton negatively but benefited airlines and fuel-dependent industries. Nvidia, despite exceeding profit forecasts, faced a 2.5% drop due to export restrictions impacting its Chinese market.

In trading, US crude oil dropped to $76.19 per barrel, while Brent crude fell to $80.90 per barrel. The US dollar weakened against the yen but strengthened against the euro.

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