South Korea
While domestic markets struggled to gain a foothold over the week, led by weakness in both large caps as well as AREITs, global markets continued to propel higher, led by Emerging Markets equities. This was against a backdrop of parliamentary chaos in South Korea, where the South Korean President faced a vote of no confidence while declaring and then revoking martial law within a 24hr period.
Europe
In France, the collapse of the Barnier government, the first to fall from a no-confidence vote in over 60 years further increases the pressure on French President Macron. While Macron’s term runs through to 2027, it does strengthen the position of the Far Right party led be Marie Le Pen and further plunges France into a period of political uncertainty. With Europe’s two largest economies in Germany & France facing significant economic and political pressure, the events further weaken the EU at a time of major geopolitical change and turmoil.
Rate Cuts & Increases
With the ECB (European Central Bank) set to meet this week, we expect a further 0.25% rate cut (to 3.0%). In the US, the release of non-farm payrolls (227k, forecast 220k) and an increase in job openings (The Job Openings and Labor Turnover Survey report) to 7.74mn saw Un rate increase to 4.2% (+0.1% personal contract purchase). The date further reinforced markets that the Fed will cut rates (by 0.25%) at its next FOMC (Federal Open Market Committee) meeting (19th Dec). However, the US economy remains in good shape, supported by both solid consumer and business outlook.
Market Data
This week sees the release of (Nov) Consumer price index data (0.3% m/m, 2.7% y/y) and Popular Price Index data (f’cst 2.6% y/y). In China, the release of manufacturing purchase managers index data (to 51.5 pts) was a positive for the economy that continues to find a stable growth foothold. However, in Aust the release of the 3q24 GDP figures (0.8% y/y) points to an anaemic growth outlook. Despite govt tax cuts, household consumption remains subdued with an increase in the savings ratio clearly reflecting a shift by households to build in additional savings buffer as the likelihood of any interest rate relief by the RBA wanes when it meets this week (10th). The other focus this week will be the domestic jobs (f’cst 25k) & Un numbers (f’cst 4.2% no chng), while in China both CPI (f’cst 0.4% y/y) and PPI (-2.8% y/y) along with a raft of industrial production, retail sale trade and export data will be the major focus. And in the UK, industrial production and manufacturing data releases will take centre stage.
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