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Tech rebounds after post-election sell-off

A recovery in technology shares helped lift Asian markets on Monday after concerns over the US election outcome drove sharp losses last week. US stocks finished mixed on Friday despite gains in the technology sector, while European equities closed lower. Strong US hiring data bolstered expectations of a Federal Reserve (Fed) rate increase in December, keeping Tuesday’s US consumer inflation report firmly in focus.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Macroeconomic data
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Taiwan leads Asian equity rebound

Asian equities rebounded on Monday following Wall Street’s recovery, with Taiwan’s Taiex gaining about 5%. Japan’s Nikkei 225 advanced 2.5%, reversing some of last week’s technology-led losses, while Korea’s KOSPI fell 0.8%. Taiwan’s rally ended seven consecutive sessions of declines after authorities tightened short-selling restrictions and confirmed that a TWD 500 billion market stabilisation fund remained available. Sentiment nevertheless remained cautious as US chipmaker Nvidia launched an investigation into reports that its chief executive had been targeted by foreign intelligence. Brent crude oil futures fell 1.7% to USD 96.70 per barrel to start the week, while West Texas Intermediate (WTI) futures declined 1.1% to USD 89.79 per barrel. Gold rose 1% to around USD 4110 per ounce, while bitcoin fell 2% to around USD 74,300.

Chinese producer inflation rises, consumer inflation eases

China’s producer prices increased 5.7% year-on-year in October, exceeding market expectations and marking the fastest rise since 2022, according to data released on Monday. Producer inflation accelerated for a third consecutive month as strong overseas demand pushed up mining and raw material prices. Consumer inflation eased to 0.7% from 0.9% in September, while core inflation, excluding food and energy, declined to 0.8% from 1%. Falling food prices offset some upward pressure from petrol costs, while persistent property-sector weakness continued to constrain domestic demand and household confidence. Mainland China’s CSI 300 edged up 0.1%, while Hong Kong’s Hang Seng Index gained 0.2%.

US technology shares regain some ground

The Nasdaq-100 recovered 1.4% to 26,989.99 points on Friday, led by semiconductor stocks following the previous session’s sell-off. The S&P 500 rose 0.3% to 7376.86 points, while the Dow Jones Industrial Average fell 0.5% to 51,285.73 points. The Nasdaq nevertheless lost 4.9% last week as the Democrats’ congressional election victory raised concerns about tighter regulation of artificial intelligence infrastructure and weaker investment.

US job growth exceeds expectations

US employers added 165,000 jobs in October, substantially exceeding market forecasts and September’s upwardly revised 60,000 increase, according to figures released on Friday. Unemployment declined to 4.1% despite a modest rise in workforce participation, while wages increased 0.4% month-on-month and 3.1% year-on-year. Hiring gains spanned several industries, led by professional and business services with 70,000 additional positions and health care with 42,000. The strong figures reinforced expectations of another Fed interest rate increase in December, with traders assigning a 73% probability at the end of the week to a quarter-percentage-point rise, compared with 67% on Thursday.

Inflation and growth in focus

This week, inflation and growth data take centre stage as energy supply disruptions complicate monetary policy and markets digest the US midterm election outcome. October US consumer prices (Tuesday) and producer prices (Friday) provide fresh evidence on inflationary pressures and their implications for Fed policy. October inflation readings also arrive from China (Monday), Germany (Wednesday) and France (Friday), alongside Swiss producer prices (Friday). The UK releases third-quarter gross domestic product data on Thursday, offering context on economic resilience following the Bank of England’s interest rate increase last week. Updated third-quarter euro-area growth figures on Friday help assess economic momentum as elevated energy costs weigh on activity.

Euro-area retail sales decline

Euro-area retail sales volumes fell 0.7% month-on-month in September, reversing an upwardly revised 0.4% increase in August, according to Eurostat data released on Friday. Annual growth slowed to 0.4% from 1.3% in August, while EU sales declined 0.6% month-on-month but remained 0.9% higher year-on-year. The euro-area contraction reflected a 1.2% drop in non-food sales excluding vehicle fuel and a 0.3% decline in food, drink and tobacco sales, partly offset by a 1% rise in fuel sales. Germany recorded the steepest monthly fall among EU countries with available data, at 2%, while Luxembourg posted the strongest increase, at 5.3%. On Friday, the Euro Stoxx 50 fell 1%, Germany’s DAX lost 1.9% and the Swiss Market Index declined 1.1%.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Hannover Re and Take-Two Interactive.

Economic data in focus: German trade balance (08:00), euro-area Sentix investor confidence (10:30).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.