Eurozone maintains rates while Asian markets are mixed
ECB maintains key rates and spending, emphasizing 2% inflation goal. US GDP: Q4 2023 grows 3.3%. Asian markets mixed. US stocks hit records.
European Central Bank Rates PEPP Spending
The ECB has decided to maintain its key interest rates, emphasizing its commitment to achieving the 2% inflation target.
The ECB maintains its key interest rates, emphasizing commitment to the 2% inflation target. Tight financing conditions persist, impacting demand and inflation. Key ECB interest rates, including refinancing operations, remain at 4.50%, 4.75%, and 4.00%. The Asset Purchase Programme (APP) is gradually decreasing, and the Pandemic Emergency Purchase Programme (PEPP) will see a €7.5 billion/month reduction in the second half of 2024, with reinvestments ending by year-end.
US GDP and Spending
The advance estimate for the fourth quarter of 2023 reveals a 3.3% annual growth rate in real GDP, following a robust 4.9% increase in the previous quarter. Contributing factors include gains in consumer spending, exports, government spending, private investment, and residential fixed investment. The deceleration from the third quarter is primarily attributed to slowdowns in private inventory investment, federal government spending, residential fixed investment, and consumer spending.
In terms of current-dollar GDP, a 4.8% increase was recorded in the fourth quarter, amounting to $27.94 trillion. The price index for gross domestic purchases rose by 1.9%, and the Personal Consumption Expenditures (PCE) price index increased by 1.7%, excluding food and energy. Disposable personal income rose by $211.7 billion (4.2%), while personal saving was $818.9 billion, resulting in a 4.0% personal saving rate.
For the entire year 2023, real GDP increased by 2.5%, reflecting growth in consumer spending, nonresidential fixed investment, government spending, and exports, offset by decreases in residential fixed investment and inventory investment.
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Asian Markets
Asian shares saw mixed performance as Chinese stocks extended gains following Beijing’s policy announcements to bolster markets. Hong Kong rose by 1.4%, and Shanghai surged by 2%, while Tokyo and Seoul experienced declines. The Chinese central bank’s measures include rules for lending to property developers and a reduction in bank reserve requirements to inject about 1 trillion yuan ($141 billion) into the economy.
Spending Low in Chinese Real Estate
China’s economic growth is forecasted below 5%, its lowest since 1990, aggravated by a real estate industry debt crisis. Chinese property developers, including China Evergrande Holdings and Country Garden, witnessed stock gains.
Speculation surrounds the Bank of Japan potentially ending its negative rate policy, impacting inflation and the currency. South Korea’s Kospi fell by 0.4%, and Sydney’s S&P/ASX 200 edged up by 0.1%.
US Stock Markets
On Wall Street, the S&P 500 set a record for the fourth consecutive day, adding 0.1% to 4,868.55. The Nasdaq composite rose by 0.4% to 15,481.92, while the Dow Jones Industrial Average fell by 0.3% to 37,806.39.
Netflix went up by 10.7% after reporting higher-than-expected subscriber additions, overshadowing a profit miss. ASML, a semiconductor industry supplier, reported strong profits, boosting tech stocks. Microsoft climbed 0.9%, contributing to index movements.
Commodity and Currency Markets
In energy trading, U.S. crude (WTI) added 31 cents to $75.40 a barrel, while Brent crude rose 27 cents to $79.90 a barrel.
The U.S. dollar edged up against the Japanese yen, reaching 147.65 from 147.51 yen. The euro decreased to $1.0880 from $1.0884.
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