In the Asia-Pacific region, most stock markets started the new week with slight gains, with the Nikkei 225 in Tokyo briefly reaching a 33-year high. In China, the central bank left key interest rates stable, as largely expected, as the weaker yuan is preventing further monetary easing and the PBoC is likely to wait and see the effects of the economic stimulus measures taken so far on demand for credit. On Wall Street, share indices trended sideways before the weekend due to a lack of new impetus. Meanwhile, the inflation rate in the eurozone continued to fall in October, dropping below the three per cent mark for the first time since mid-2021.
The People's Bank of China's key interest rate for one-year loans - the benchmark for most household and corporate loans in China - remained unchanged at 3.45 per cent. The reference interest rate for five-year loans - the benchmark for mortgages - also remained at 4.2%. The Hang Seng Index in Hong Kong rose by 1.8% at the start of the week, after the barometer had come under heavy pressure on Friday due to the slump in the share price of Chinese e-commerce giant Alibaba. Japan's Nikkei 225 briefly reached its highest level in 33 years at the start of the session but was subsequently unable to hold on to its gains and was down around 0.6% shortly before the close. South Korea's Kospi, on the other hand, rose by around 1% and in Australia the S&P/ASX 200 gained around 0.15%.
In New York, the share indices remained virtually unchanged on Friday, consolidating gains over the week. The Dow Jones Industrial closed at 34,947.28 points (+0.01%) and achieved a weekly gain of just under two per cent. The broad market S&P 500 ended last week with a moderate daily gain of 0.13% at 4,514.02 points. The technology-heavy indices on the Nasdaq also ended Friday's trading only slightly changed compared to the previous day. With the corporate reporting season drawing to a close, there was a lack of impetus at individual stock level and the latest economic data from the US was also unable to set the tone on the trading floor.
Building permits, which are significant for future construction activity, rose by 1.1% in October compared to the previous month - a decline of 1.4% had been expected - and the number of housing starts increased by 1.9% on a monthly basis (consensus -0.6%).
On the bond market, the benchmark yield on the ten-year US government bond fell further on Friday on the assumption that US monetary policy may have peaked. Current level at the start of the week: 4.46%. On the foreign exchange market, the euro climbed just above the 1.09 mark against the US dollar, reaching its highest level since the end of August.
In the eurozone, the inflation rate continued to fall in October, falling below the three per cent mark for the first time since mid-2021. According to revised Eurostat data, annualised inflation last month was 2.9% compared to 4.3% in the previous month. Core inflation, excluding the often volatile prices for energy and food, was 4.2% in October after 4.5% in the previous month. Energy prices in particular were around 11% lower than in the same period last year. Despite the significantly weaker inflation, the European Central Bank's (ECB) medium-term target of two per cent is still being exceeded.
In a speech at the European Banking Congress, ECB President Christine Lagarde warned that there are increasing signs that the global economy is falling apart into competing blocs, while at the same time climate catastrophes are increasing from year to year. Europe is now at a critical point, with deglobalisation, demographics and decarbonisation on the horizon.
Corporate news in focus: Julius Baer Q3 figures and Agilent Technologies Q4 figures.
Economic data in focus: Germany producer prices October (08:00) and from the US the leading indicator October (16:00).
Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.