Global Market Team

Global Market team publishes weekly news commentary to share our insights on significant news and how it will impact the markets.

TIGHT JOB MARKET RAISES THE COST OF CURBING INFLATION

News Commentary | Week of 28th Nov - 2nd Dec

As high-profile layoffs surge among U.S. tech giants and banks, the labor market – while cooling, is not yet in line with the Fed’s 2% inflation target when job openings and wage growth remain robust. October job openings declined from 10.7 million to 10.3 million, still above the level from August 2021. Wage increased 7.7% YoY in November 2022, down merely 10 bps from October 2022.

SMOOTHER MONETARY TIGHTENING POLICIES ARE EXPECTED AMID THE DARKENING OUTLOOK

News Commentary | Week of 11 - 17th Nov

After central banks' last meetings and a cooling in U.S. inflation in October, markets are priced in a 50 bps rise in December’s FOMC, and milder rate hikes are expected to continue into 2023. Jennifer McKeown, the chief global economist at Capital Economics, stated that with the signals of weakening economies, easing domestic price pressures, and equilibrium interest rate levels, the central banks are expected to slow down the pace of tightening.

U.S. INFLATION IN OCTOBER IS MILDER THAN EXPECTED, SHOWING COOLING SIGNS OF AN OVERHEATING ECONOMY

News Commentary | Week of 4 - 10th Nov

The U.S. CPI rose by 7.7% YoY in October, the first print below 8% since February 2022. The core CPI also decelerated to 6.3% YoY from 6.6% YoY in September. The decelerating inflation figures eased pressure from the Fed’s price stability mandate. Global stocks rallied as the market hoped for a milder rate hike cycle and a closer approach to its pivot.

CHINA ONSHORE AND OFFSHORE STOCKS RECORDED JAW-DROPPING LOSSES AFTER COMMUNIST PARTY CONGRESS

News Commentary | Week of 31 Oct – 4 Nov

The 20th National Congress of the Chinese Communist Party ended on 22nd October. Investors are worried at President Xi Jinping’s power grab and his recommitment to Zero COVID strategy, yet the magnitude of the sell-off was still surprising. Hang Seng China Enterprises Index slumped almost 9%, the most for any post-Congress five-day period since 1994. The index dropped below 5000 on 31st October, the lowest level last seen in the GFC.

UK INFLATION MOVES BACK UP TO 40-YEAR HIGH OF 10.1%

News Commentary | Week of 17 - 21st Oct

The highest food price increases in decades drove September U.K.'s CPI back to 10.1% YoY, exceeding economists' expectations and reaching a 40-year high inflation rate. Despite transport inflation falling significantly from July’s high, core inflation rose from 6.3% to 6.5% MoM, signaling long-term inflationary pressures remains. The BoE will have to weigh the price pressures against the government's U-turns on unfunded tax cuts and energy prices cap.

US IMPOSE RESTRICTION ON CHINA’S ACCESS OF US SEMICONDUCTOR TECHNOLOGY

News Commentary | Week of 14 - 20th Oct

US introduced sweeping rules to restrict China’s access to US semiconductor technology. US companies must apply for a license if they want to supply equipment support high-end chip production to Chinese companies. Foreign companies will also need a license to source equipment for producing advanced chips that sell to China. Temporary licenses would be granted for companies to manufacture in China.