Key Indicator: OPEC+ to meet, Impacts & Global Sentiments
Post-Black Friday, markets saw Wall Street’s fear plummet, an indicator for optimism. China’s economic concerns shaped the landscape.
U.S. Economy Indicator
Post-Thanksgiving, the VIX index on Wall Street, a measure of implied volatility, plummeted to its lowest level since pre-pandemic times. This plunge, down to 13 (from previous levels above 20), indicates a bullish market sentiment for 2024 and a potential shift in options hedging strategies towards historical mean values.
Bonds and Rates
Despite the auction of $148 billion in 2-, 5-, and 7-year U.S. Treasury notes, bond market volatility measured by .MOVE indices also dropped significantly, hitting their lowest levels since September 25. The 10-year Treasury yields hovered just under 4.50%, approximately 10 basis points higher than the intraday low on Wednesday.
Federal Reserve officials maintained a cautious stance on interest rate cuts, with Fed futures pricing in only 80bps of rate cuts by the end of next year, contrary to expectations from some banks foreseeing larger cuts. Deutsche Bank anticipated a sizable 175bp cut in 2024, which could bring the policy rate down to 3.63% by year-end.
Retail activity around ‘Black Friday’ sales showcased early positivity, especially in online sales, despite the stock opening on Monday appearing in the red. U.S. crude oil prices slid ahead of the rescheduled OPEC+ meeting on Thursday.
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China’s Economic Concerns
China’s major stock indexes, particularly the CSI300, saw a substantial 21% year-to-date underperformance against MSCI’s all-country indexes (.MIWD00000PUS). Profit growth at China’s industrial firms slowed notably, with year-on-year gains at just 2.7%, missing forecasts and indicating a need for policy support measures to shore up the world’s second-largest economy.
Amid these economic challenges, property developers in China faced a 2.3% plunge in their stocks, failing to sustain recent gains on hopes of government support. Additionally, Beijing police investigations into suspected crimes by a leading Chinese wealth manager added further uncertainty.
However, the implementation of a policy preventing major shareholders from selling stocks led to a surge in small-cap Chinese stocks, with the Beijing Stock Exchange index jumping 11% following a record 21% gain the previous week.
European Economic Indicator
The Eurozone’s economic indicators showed signs of improvement, narrowing the gap between positive economic surprise indexes in the U.S. and the Eurozone. European Central Bank chief Christine Lagarde’s upcoming speech in the European Parliament remains a focal point influencing market sentiment in the region.
Global Market Dynamics
Global markets are navigating a delicate balance between positive sentiment, economic indicators, and geopolitical developments. Investors are monitoring economic indicators, earnings reports from key companies, and developments in the cryptocurrency market. Oil prices remain in focus as traders await the outcome of the OPEC+ meeting.
Upcoming Key Events
Key economic events include the U.S. Oct new home sales, the Dallas Fed Nov manufacturing survey, and crucial developments in Asian markets. OPEC+’s meeting outcomes, economic indicators such as PMIs, and geopolitical developments will significantly impact global sentiment as November draws to a close.
Financial Market Movements
Stock markets experienced mixed finishes, with Walmart facing an 8.1% drop due to consumer spending concerns, while Macy’s delivered a surprising 5.7% profit. Cisco Systems faced a 9.8% downturn despite strong results, reflecting a slowdown in new product orders. The S&P 500 is on track for its best month in a year, driven by hopes for a “Goldilocks” economy.
More important news updates, as well as helpful Forex trading techniques will be shared in our economic blog