Weekly market recap

Your weekly global financial market newsletter

  • U.S. stocks are reaching all-time highs once again, natural gas hit a one-year high, and the Canadian dollar finally broke away from its four-year low.

Indices

US stocks returned to growth last week and are once again approaching new all-time highs. Despite ongoing uncertainty surrounding the new President’s actions and their impact on the economy, as well as the deepening uncertainty over the conflict in Ukraine, the markets managed to post strong weekly returns, supported by better-than-expected better-than-expected labour and housing market data.

Equities in Europe delivered mixed results, as tensions between Russia and Ukraine were felt more acutely, and the economic outlook for the European economy remained unpromising. The pan-European STOXX Europe 600 rose 1.06%, France’s CAC 40 Index declined by 0.20%, Germany’s DAX gained 0.58%, and the UK’s FTSE 100 Index advanced by 2.46%.

US30
+1.96%
US100
+1.87%
US500
+1.68%
GER30
+0.58%

Commodities

The price of US natural gas reached a one-year high of $3.35/MMBtu on Thursday, despite expectations that gas production will increase next year for the first time since the COVID-19 pandemic. One of the key factors influencing near-term demand could be the colder weather forecasted for most of the US. Additionally, a surprising 3 billion cubic feet drop in gas inventories was reported, contrary to the expected 5 billion cubic feet increase the previous week, as producers scaled back production. LNG feed gas flows also rose to ten-month highs due to supply concerns in Europe toward the end of the year.

Gold prices, after falling below the $2,550 per troy ounce level, posted five consecutive days of gains, climbing back above the $2,700 level. One of the main drivers behind this recovery is the re-escalation of the conflict in Ukraine, which has once again reinforced gold’s status as a safe-haven asset.

Gold
+5.98%
Silver
+3.65%
BRENT
+5.81%
NATGAS
+10.84%

Forex

The Canadian dollar rebounded from its lowest level against the U.S. dollar since May 2020 at 1.41, strengthening to 1.40 after strong inflation data reduced the likelihood of further rate cuts by the Bank of Canada. Robust labour market data and better-than-expected PMI figures also supported the currency. However, further appreciation was limited primarily by a strengthening U.S. dollar, driven by the potential introduction of import tariffs in the U.S., which could negatively impact Canadian exports, as well as a shift in the Federal Reserve’s rhetoric on rate cuts.

Weak data on UK economic activity—particularly in retail sales and PMIs for both the services and manufacturing sectors, which unexpectedly declined—caused sterling to weaken to its lowest level since mid-May this year.

The euro also experienced a significant decline, dropping to two-year lows of 1.035. This was largely due to unfavourable macroeconomic data (especially PMI), heightened vulnerabilities in individual economies, and an increased likelihood of economic shocks, compounded by the escalation of the conflict in Ukraine.

EUR/USD
-1.16%
USD/JPY
++0.27%
GBP/USD
-0.66%
USD/CAD
-0.78%

Macro

In the US, data on the housing and labour markets were the main focus. In the housing market, existing home sales data stood out, with a report from the National Association of Realtors showing a year-on-year increase in October for the first time since July 2021.

Labour market data also brought positive surprises. Initial jobless claims unexpectedly declined, marking the lowest increase in jobless claims since April this year. Additionally, the preliminary October services sector PMI exceeded expectations, rising to 57, the highest level since March 2022.

In contrast, economic activity in the EU showed worrying signs, as reflected in PMIs for both the manufacturing and services sectors. After promising growth in previous months, the services sector PMI fell below the threshold indicating contraction for the first time since February, while the manufacturing sector PMI dropped to 45.2. Similarly, UK PMIs posted an unexpected decline, ending a year-long period of growth.

UK inflation also accelerated beyond expectations. Consumer prices rose by 2.3% year-on-year in October, compared to a 1.7% increase in September and exceeding the anticipated 2.2% growth. The core inflation rate climbed to 3.3%.

What to watch out for this week

  • Next week will be influenced by the US Thanksgiving holiday, which will affect market trading on both Thursday (markets will close early, and US stocks will not trade) and Friday (trading will close early).
  • On Tuesday, the consumer confidence index will be released in the United States, which, according to market expectations, could rise to 113 points in November from 108.7 in October. This would mark the highest level of confidence this year, potentially reflecting consumers' positive economic expectations following the presidential election. Statistics on new home sales will also be released, with a slight decline anticipated. Additionally, the minutes from the Fed's November meeting, which resulted in a 25 basis point rate cut, will be published.
  • On Wednesday, a revised estimate of US economic growth in the third quarter will be released. According to the initial estimate, growth reached 2.8% in annualised terms, and the original figures are expected to be confirmed. Durable goods orders, personal income and expenditure data, and the PCE price index will also be released. The PCE price index is estimated to have risen year-on-year from 2.1% to 2.3% in October (0.2% month-on-month).
  • Thursday will bring an estimate of November inflation in Germany, with prices expected to decline month-on-month but increase to 2.2–2.5% year-on-year. On Friday, the November inflation rate for the euro area will be released, with an expected acceleration from 2% to 2.4%.

Disclaimer

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