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Central banks take centre stage

Monetary policy takes centre stage this week, with interest-rate decisions from the Federal Reserve (Fed) and Bank of Canada on Wednesday, the European Central Bank (ECB) on Thursday and the Bank of Japan on Friday, as elevated energy prices complicate the inflation outlook. US third-quarter gross domestic product and September personal consumption expenditures data on Thursday provide an update on growth and the Fed’s preferred inflation gauge. Third-quarter growth figures from France, Germany and the euro area follow on Friday. October inflation readings from Tokyo, France and Germany, also due on Friday, offer further insight into price pressures. Germany’s October ifo Business Climate Index on Monday, US October consumer confidence on Tuesday and Switzerland’s October KOF Economic Barometer on Friday help gauge economic momentum. On the corporate side, earnings from Microsoft and Alphabet on Wednesday and Amazon on Thursday put cloud demand and returns on artificial intelligence investment in focus, after last week’s key technology results fuelled concerns about heavy AI spending and triggered a sell-off in AI-related shares.

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

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Asian stocks slip as chipmakers retreat

Asian equities mostly declined on Monday as doubts about the profitability of artificial intelligence investment weighed on chipmakers, with Japan’s Nikkei 225 down 0.8%, South Korea’s KOSPI losing 1.5% and mainland China’s CSI 300 falling 0.3%. Hong Kong’s Hang Seng bucked the trend with a 0.5% gain. Oil remained in focus, with Brent crude oil futures falling 1.5% to USD 109.99 per barrel, while West Texas Intermediate (WTI) futures declined 2% to USD 101.25 as diplomatic initiatives to ease the US-Israeli conflict with Iran reduced supply concerns. The US Dollar Index slipped 0.1% to 101.69, while gold gained 0.3% to around USD 4010 per ounce. Bitcoin declined 0.6% to around USD 80,000.

US stocks weaken as oil prices rise

The Nasdaq 100 ended Friday essentially unchanged at 28,957.53 points, failing to recover from a nearly 3% decline in the previous session. The Dow Jones Industrial Average fell 1.2% to 52,215.16 points, while the S&P 500 dropped 0.5% to 7623.68 points. The Nasdaq 100 and S&P 500 recorded weekly losses of 0.8% and 0.5%, respectively, whereas the Dow gained 0.4%. Rising oil prices last week amid the Middle East conflict intensified inflation concerns ahead of the Federal Reserve’s interest rate decision on Wednesday, while doubts about the returns on substantial artificial intelligence investment continued to weigh on technology stocks.

UK growth strengthens as euro area slows

S&P Global’s flash composite purchasing managers’ indices released on Friday showed UK business activity accelerating in October, with the index rising to 53.1 from 52 points in September, while the euro-area reading fell to a four-month low of 51.9 from 53.1. Manufacturing and services growth strengthened in the UK but weakened in the euro area, where French private-sector activity returned to contraction. Stronger demand, partly supported by artificial intelligence investment and technology services, helped UK employment increase for the first time in two years, whereas weaker order growth left euro-area hiring broadly stagnant. Input-cost inflation accelerated in both economies, driven largely by higher manufacturing costs, although firms raised selling prices more slowly than in September. The Euro Stoxx 50 closed 0.3% lower on Friday.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Verizon and Welltower.

Economic data in focus: German ifo Business Climate Index (10:00), Dallas Fed Manufacturing Index (15:30).

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