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Buy the JPMorgan dip?

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Europe stocks gain on economic data, ECB minutes

Friday, November 24, 2023

Today’s headlines

What’s happening: European stocks settled higher on Thursday, as markets assessed recent economic reports and the ECB meeting minutes.

What happened: Investors focused on European stocks, with the US markets being closed for Thanksgiving.

Oil and gas stocks were among the top performers on Thursday, despite the continued decline in crude prices.

Why it matters: European stocks rose on Thursday, mirroring the rise in US equities on the previous trading day. US stocks climbed on Wednesday after the 10-year Treasury yield declined to its lowest mark in two months ahead of the Thanksgiving holiday.

Data released on Thursday showed that the HCOB Eurozone manufacturing PMI rose to 43.8 in November, from 43.1 in the previous month. This not only topped market estimates of 43.4, but also was the strongest level in six months. Despite the improvement, Eurozone’s manufacturing activity contracted for the eighth month in a row.

Services PMI rose to 48.2 in November, from 47.8 in October, exceeding market expectations of 48.1. This also signalled a contraction in services activity for the fourth consecutive month. The HCOB Eurozone composite PMI increased to 47.1 in November, from around a three-year low of 46.5 a month ago.

Minutes from the ECB’s latest meeting showed that central bank officials unanimously agreed to hold interest rates at restrictive levels for as long as required to bring inflation back to the targeted range. However, they also remained open to the possibility of more rate increases depending on the state of the economy.

The STOXX Europe 600 Index gained 0.27% to a two-month high of 458.47 on Thursday, with oil and gas stocks adding around 1.4%, despite oil prices continuing to decline after the OPEC announced a delay in its policy-setting meeting. Travel stocks were the worst performers, falling around 1%.

The OPEC+ (Organization of the Petroleum Exporting Countries and its allies) is now expected to hold a virtual meeting on November 30 to make a decision on the upcoming crude output. The group was earlier scheduled to meet in Vienna over November 25-26, but delayed that meeting amid disagreements over output quotas.

London’s FTSE 100 gained 0.19% to close at 7,483.58 on Thursday, while Germany’s DAX 40 rose 0.23% and France’s CAC 40 added 0.24%.

What to watch: Investors will assess speeches from ECB’s members, including ECB President Lagarde, scheduled for today.

Traders will continue monitoring the Dutch election results after an election exit poll signalled a victory for Geert Wilders, Founder of the Party for Freedom (PVV).

The markets today

The British pound will be in focus today following the release of economic data

Context: The GBP/USD forex pair surged to its strongest level since early September on Thursday.

Details: A day after the announcement of the Autumn Statement budget by UK Finance Minister Jeremy Hunt, data released on Thursday showed private sector activity in the country stabilising in November. This marked the end of a three-month contraction period, which increased prospects of the UK avoiding a recession.

The UK Finance Minister announced measures to accelerate the country’s sluggish economic growth. Hunt projected UK’s GDP to expand by only 0.7% in 2024, versus the 1.8% growth forecast issued in March by the OBR (Office for Budget Responsibility).

The UK composite PMI increased to 50.1 in November, from 48.7 in the previous month. This was above market estimates of 48.7 and represented growth in private sector output after marginal contractions in the prior three months.

The S&P Global/CIPS UK manufacturing PMI improved to 46.7 in November, from 44.8 in the earlier month and exceeded market estimates of 45, while services PMI climbed to 49.5 in November, from 49.3 in October, also exceeding expectations of 49.2.

The GfK Consumer Confidence indicator increased to -24 in November, versus October’s reading of -30.

The Bank of England held interest rates unchanged over its previous two meetings. There are growing speculations of a rate cut in June.

The GBP/USD forex pair rose to its highest level of 1.2575 since September 6 during Thursday’s session but pared some gains later. The sterling also briefly climbed to a nine-day high against the euro on Thursday.

What to watch: With no major economic reports due to be released today, investors await data on CBI distributive trades from the UK on Monday. The Confederation of British Industry’s monthly retail sales balance, which dipped to -36 in October, is expected to improve to -6 in November.

Other Markets: US trading indices closed higher on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.53%, 0.41% and 0.43%, respectively.

The news shaping the markets

Ukrainian President Volodymyr Zelenskiy thanked the US, on Thanksgiving, for its support in the war with Russia, saying that it had saved “millions of Ukrainian lives.” The news sent the safe-haven US dollar index lower this morning.


New Zealand’s retail sales remained flat in the third quarter, versus a 0.9% decline in the prior quarter, lending support to the NZD/USD forex pair.


Japan’s annual inflation rate accelerated to 3.3% in October, from 3.0% in the previous month, sending the JPY/USD pair slightly higher in forex trading this morning.


Argentina’s retail sales jumped 182.1% year-over-year in September, following a 158.9% increase in the prior month, which lent support the ARS/USD forex pair.


Canada’s wholesale sales declined by 1.1% in October, versus a 0.4% increase in September, sending the CAD/USD pair lower in forex trading this morning.

What else to watch today

Germany’s GDP growth rate, Ifo business climate indicator, Ifo current conditions and Ifo expectations, Turkey’s manufacturing confidence index, capacity utilization and tourist arrivals, Spain’s producer prices change, Brazil’s FGV consumer confidence, India’s foreign exchange reserves, Mexico’s gross domestic product, economic activity and current account, Canada’s retail sales and manufacturing sales, as well as US composite PMI, manufacturing PMI, and services PMI.


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