Market movers today
In the euro area, markets will look out for a decision by US President Trump on whether or not he will impose European car tariffs. Latest hints from US Commerce Secretary Ross and EU Commission President Juncker suggested that Trump will postpone his decision yet again into next year, after ‘good conversations’ with car manufacturers about potential production relocations. Should the tariffs be implemented, it would be a major hit for the already fragile European manufacturing sector. Figures out today will likely confirm that the industrial recession has extended into Q3, although it seems to have stopped intensifying.
In the US and the UK, CPI figures for October are due out. US CPI core has surprised on the upside in recent months, but we do not expect this to be the beginning of a new trend given the low inflation expectations and look for an unchanged inflation rate at 2.4%.
Fed chair Powell will address the Joint Economic Committee of Congress today. We expect him to reiterate that the current monetary policy stance is appropriate in the absence of further deterioration in the data (see FOMC Update: Fed on hold for now but may be forced to cut again, 11 November).
Overnight the Japanese Q3 GDP figures will be released, which should show solid growth of 0.5% q/q, as PMIs have held up.
Inflation figures are also in focus again in Sweden today. We expect a slight increase in CPIF in October.
Selected market news
Against consensus, but in line with our expectation, the central bank of New Zealand did not cut interest rates. The NZD is up by about 1%.
In a speech yesterday, Donald Trump said on trade ‘if we don’t make a deal, we’re going to substantially raise those tariffs’, according to Bloomberg. Markets reacted somewhat adversely and particularly so as good news has been discounted on trade in recent months but overall the reaction was relatively minor. The broad message from Trump was unchanged with focus on trade and monetary policy.
Hong Kong’s stock market dropped 2% as the unrest continues. Many other equity markets have gone up in recent months, but Hong Kong’s remains challenged.
