Market Update – 29th November 2023.

29th November 2023

The week opened quietly as investors await major economic data due from both the eurozone and the US this Thursday.

Economists are forecasting that Eurozone annual CPI inflation will decrease to 2.7%, with a slide in the core rate from 4.2% in October to 3.9% in November. The US’ Personal Consumption Expenditure price index is also thought to slow to 3% year-on-year – a real win for the respective central banks.

In relation to the energy sector, European markets await the OPEC meeting due to take place this week as crude oil fell to $80.28 – down from levels of around $90 last month. The dip in prices of oil and gas, brought about by record gas storage levels, will no doubt allay investors’ fears of a spike in inflationary pressures – meaning global CPI figures continue to move in a downward trajectory.

Something potentially assisting the Bank of England’s battle with inflation was revealed this week by the British Retail Consortium. They produced a report on Tuesday showing that British store chains have exhibited the slowest price growth in a year and a half. Their survey illustrated that annual inflation has dipped to its weakest since the summer of 2022 to 4.3% in November, with food inflation sliding from 8.8% to 7.8% year-on-year.

While the UK have been looking to get inflation down to 2%, the Bank of Japan have been looking to achieve a 2% target and have been considering ways of maintaining this. An annual government survey that was published on Tuesday showed that firms in Japan are planning to raise their monthly average regular wages – if they haven’t already – by a record amount since published data began in 1999. The report highlighted that monthly wages for Japanese workers have already rose this year by 3.2%.

Over in the US, the Consumer Confidence Index, which measures the US public’s perception of current economic conditions and outlook, increased this month to 102.0 after declining three times in a row. Kicking off the Christmas shopping season, consumers beat analysts’ expectations of 101 and October’s revised reading of 99.1, with confidence increasing the most amongst house owners aged 55 and above. The index also indicated that consumers are concerned over rising prices and geopolitical tensions.

Still to come this week we have Eurozone economic sentiment, consumer confidence and unemployment rate, Japan retail sales, Chinese manufacturing PMI, and US CPI data.

Nicola Tune, Portfolio Specialist