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The Bull&Bear Bulletin 16.11.2023

As we start the day, there's a growing belief that the cycle of interest rate hikes by major central banks might be coming to an end. This sentiment is gaining strength thanks to recent inflation reports and other economic indicators from key global economies.

The figures released yesterday indicated that U.S. producer prices have seen their most significant drop since April 2020. In the UK, consumer inflation numbers came in below all expectations. These developments suggest a potential easing of inflationary pressures, which influence market expectations on what central banks' are going to do with their monetary policy

Oil Prices

In the commodities market, oil prices continued their downward trend on Wednesday. This marks a more than 10% decrease compared to last year, reflecting the global demand and supply and focus on the economic health of the global economy.

Rate cuts?

The expectation of rate cuts next year is becoming more prevalent among investors. This anticipation is exerting downward pressure on bond yields and the U.S. dollar. In contrast, stocks and risk assets appear buoyant, benefiting from these shifts. Overall, financial conditions are becoming more accommodative across various countries, indicating a looser and risk-on environment.

Close to averting shutdown

The U.S. House of Representatives has taken a step to prevent a government shutdown by passing a temporary spending bill. The bill, which received broad bipartisan support, now requires approval from both the Senate and the Republican-controlled House. They need to finalise this legislation before the current federal funding expires on Friday night to avoid a shutdown.

Japanese economy weaker than expected

From Japan, the latest GDP figures were weaker than expected, prompting economists at institutions like Barclays to revise their growth forecasts for 2023 and 2024 downwards. Despite this, financial conditions in Japan are reportedly the most favourable since 1990. This situation may be influencing the Bank of Japan's increasingly hawkish stance, with speculation that it may end its negative interest rate policy early next year.

China stimulus and housing

The market focus today, however, is on the prospects of larger stimulus measures, particularly in light of China's recent actions. The Chinese central bank has injected a significant amount of cash through medium-term policy loans. This move comes amid a deepening slump in China's property market, as indicated by the sharpest fall in home prices in eight years, reported in October.

Biden- Xi Jinping meeting

Тhe meeting between the U.S. President Joe Biden and Chinese leader Xi Jinping has was one of the focal points yesterday, so here’s a summary

  • There is plenty of room for US-China cooperation

  • The door of US-China relations cannot be shut

  • US should not bet against China or interfere with its internal affairs

  • China has no intention to challenge the US

  • Have reached important consensus with Biden to enhance people-to-people exchanges

  • Joe Biden calling Xi a dictator

  • The world needs China and US to work together

Microsoft new AI chip

The tech giant unveiled two new chips - the Maia 100 AI chip, which could rival Nvidia's AI GPUs, and the Cobalt 100 Arm chip for general computing tasks, potentially competing with Intel. This development is part of Microsoft's broader strategy to offer diverse cloud infrastructure options to its clients, a field where it has significant cash reserves and a notable market presence.

Key events today:

Looking at the European markets, the day appears to be relatively calm. However, the bond market and overall risk sentiment might provide some activity. Later in the day, the U.S. will release initial jobless claims data, which could influence market movements.

Key earnings today:

Gap IncApplied Materials IncRoss Stores IncAlibaba Group Holding LtdWalmart IncUnited Utilities Group PLCSiemens AGSociedad Quimica y Minera de Chile SACisco Systems Inc

Wishing you successful trading,

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