Macro-News round-up:

#MarketNews

• Germany’s unemployment rate rose slightly in November as the economy is expected to enter a recession in the fourth quarter.

• France enters into economic contraction. Europe’s second-largest economy enters negative territory, following Germany’s data. France GDP Q3 (QoQ) -0.1%.

• Japan Oct factory output rises on circuits, autos rebound – Japan’s factory output rose in October due to increases in the production of electronic components and vehicles. Japanese Industrial Output Prelim MoM SA Actual 1% (Forecast 0.8%, Previous 0.5%). A Bank of Japan policymaker said there will be no near-term policy shift and advised caution due to uncertainty in overseas economies.

• China’s manufacturing sector continued to contract in November, leading to expectations for more policy support from the government. Chinese NBS Manufacturing PMI Actual 49.4 (Forecast 49.8, Previous 49.5)

• The U.S. economy grew at an annualized rate of 5.2% in the third quarter, but higher interest rates are expected to slow down the momentum.

Possible market turnaround: Demand for VIX options is strong as investors seek to protect their portfolios from market volatility. That has come alongside record average trading volume in contracts betting on the Cboe Volatility Index VIX (referred to as the fear gauge of Wall Street) as looming economic and geopolitical risks keep investors cautious about a potential return of volatility, October had the highest level of VIX options activity for the year.

Fed policymakers: the public report presented today by the 12 banks of the Fed ends its summary with these words: “Most districts expect prices to continue to rise moderately in the coming year”. 50% of districts consider that there is a deterioration in the country’s economic activity.

• Commodities: OPEC+ additional oil output cut discussions range from 1 to 2 million bpd. if a significant cut is finally achieved, the price of oil will rise, and the risks of new waves of inflation will spoil hopes for interest rate cuts that are boosting U.S. stocks, despite uncertain economic conditions in 2024.

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