Fundamental updates by Solid ECN

[SOLIDECN]

Istanbul's Manufacturing PMI Sees Slight Rise in December 2023​

Solid ECN – In December 2023, the Istanbul Chamber of Industry Turkey Manufacturing PMI slightly increased to 47.4 from 47.2 the previous month. This change indicates a minor improvement in the manufacturing sector's health. However, it still represents the sixth consecutive month of contraction. Tough market conditions, both domestically and internationally, caused a slowdown in new orders and decreased production.

In terms of prices, December saw another rise in input costs. This increase was driven by a weaker currency, higher wages, and increased raw material prices. Yet, the inflation rate slowed down for the fifth month in a row. On the other hand, output prices saw their sharpest increase since August.

Purchasing activities were reduced significantly, the most in four months. Consequently, input stock levels also dropped. Regarding employment, it remained stable in December, breaking a two-month trend of decline.​

 

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2024 Starts with a Dip: U.S. Stock Futures Decline After Strong 2023​

As 2024 begins, U.S. stock futures are experiencing a slight decline, marking a pause following a robust 2023 that witnessed substantial double-digit growth across the three main indices. Currently, investors are diligently evaluating the economic landscape and monetary policy expectations, especially in anticipation of the forthcoming FOMC minutes and the crucial jobs report due later this week.

The S&P 500 futures have dropped by 0.5%, while the Dow Jones is facing a reduction of approximately 110 points, and the Nasdaq 100 is also on a downward trajectory, decreasing by 0.7%. In the realm of corporate news, Tesla has seen its stock dip by about 1% in premarket trading. Market participants are keenly waiting for the company's announcement of its annual production and delivery figures, set to be released later today.​

 

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US Dollar, China Data Influence Copper Market​

In January, copper futures dipped below $3.9 per pound, moving away from the five-month peak of $3.95 reached on December 27th. This decrease is a result of the US dollar's resurgence and some profit-taking activities by commodity trading companies.

The rebound of the US dollar, as traders evaluate the Federal Reserve's potential policy changes this year, has made copper, which is priced in this currency, more expensive for importers, leading to a drop in prices. Additionally, the demand from major Asian customers, particularly China, is under scrutiny.

The conflicting signals from China's official manufacturing PMI and the broader Caixin data have created uncertainty about the future copper demand in the country. Despite a modest rise in copper prices last year, market experts have been accumulating long positions in copper, anticipating that supply might not meet the strong future demand driven by the global push for electrification.​

 

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NZX 50 Dips Amid Global Market Jitters​

Solid ECN – On Wednesday, the NZX 50 fell by 40.36 points, a 0.34% drop, ending at 11,730.14. This followed a slight downturn in US futures after a tough start to the year on Wall Street, especially in tech stocks. Ahead of key US job data and the nonfarm payrolls report, traders seemed less hopeful about interest rate cuts from the Federal Reserve.

Concerns grew as China's uncertain economic future cast a shadow, affecting its main trading partners like New Zealand. Recent data showed a decline in China's manufacturing for December, though some private surveys suggested a slight positive trend in the sector. The NZX 50 was impacted by sectors like manufacturing, transport, consumer services, and non-durables. Notably, Restaurant Brands NZ dropped 4.5%, Scales Corp. 2.9%, Auckland Intl. 2.7%, A2 Milk Co. 2.4%, and Meridian Energy Ltd. 1.8%.​

 

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FTSE 100 Rises; Investors Eye Fed Minutes for Rate Cut Hints​

Solid ECN – The FTSE 100 recently reached a seven-month peak, primarily fueled by a 1% uplift in sectors like personal care, pharmaceuticals, and groceries. In the realm of individual stocks, Entain experienced a 2% increase following the appointment of Ricky Sandler as a non-executive director. Similarly, GSK Plc witnessed a nearly 2% boost, thanks to an upgraded rating from Jefferies.

On the flip side, the precious metal mining sector saw a 0.7% decline. In a broader economic context, the Institute of Directors (IoD) confidence index revealed a growing sense of pessimism and caution among British business leaders, particularly regarding investment decisions. Additionally, investors are keenly anticipating the release of the Federal Reserve's December meeting minutes, hoping for clues about future interest rate cuts.​

 

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Sector and Regional Shifts in Job Openings for November 2023​

Solid ECN – In November 2023, there was a noticeable drop in the number of available jobs, reaching the lowest point since March 2021. The total fell to 8.790 million, which was 62,000 fewer than the previous month and slightly under the anticipated 8.85 million. This decline was particularly evident in specific sectors and regions. Transportation, warehousing, and utilities saw a significant reduction of 128,000 job openings, while federal government positions decreased by 58,000. However, it wasn't all downward trends; the wholesale trade sector experienced a boost, adding 63,000 jobs.

The regional impact varied, with the South experiencing the largest decrease in job opportunities, losing 128,000 positions. The Northeast and the West also witnessed declines, with 29,000 and 7,000 fewer jobs, respectively. In contrast, the Midwest bucked the trend by showing an increase of 102,000 job openings.​

 

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NZX 50’s Comeback: A Detailed Analysis​

Solid ECN – On Thursday, the NZX 50 index made a comeback. It rose by 28.98 points or 0.25%, ending at 11,759.11. This was after a slow start with minor losses. The turnaround happened when a private report showed that service activities in China, a major trade partner, reached a five-month high in December.

Market players were optimistic. They hoped that Chinese authorities would shift from yuan stabilization to monetary easing. This came after the People’s Bank of China (PBoC) significantly weakened the currency fixing, the most in over six months. US futures also saw a slight increase, boosting market sentiment. Investors were still processing the latest Federal Reserve minutes, which hinted at potential rate cuts in 2024.

In company news, PaySauce, a fintech firm, reported a 23% annual increase in its recurring revenue for the fiscal quarter ending on December 31st. The day’s top performers included industrial services, consumer durables, and utilities sectors. In terms of individual stocks, Scales Corp. led the pack with a 3.0% jump. It was followed by Meridian Energy Ltd. (2.8%), Comvita NPV (2.6%), and Hallenstein Glassons Holdings (1.3%).​

 

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Canadian Dollar Dips Beyond 1.33 USD​

The value of the Canadian dollar has recently decreased, now exceeding 1.33 against the US dollar. This decline follows a notable peak at 1.32 on December 26th, which was the highest in five months. Several factors contribute to this shift: a strengthening US dollar, underwhelming economic data within Canada, and a decrease in foreign currency coming into the country.

Particularly impactful was the manufacturing PMI in Canada, which saw its most significant reduction since the 2020 pandemic-induced downturn. This situation constrains the Central Bank of Canada's ability to implement strict policies to combat inflation. Additionally, a global reduction in oil demand is affecting the foreign exchange inflows, further weakening the Canadian dollar. Investors are now keenly anticipating the upcoming labor market data, set to be released on Friday, hoping it will shed light on the potential direction of future monetary policy.​

 

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NZX 50's Slight Dip Amid Global Uncertainty​

Solid ECN – Heading into 2024, New Zealand's NZX 50 saw a slight decline, ending at 11,748.49 on the last day of the week. This minor fall of 0.1% encapsulated the market's tepid response to international economic signals. Notably, Wall Street's sluggish beginning to the new year played a role in this downturn.

Furthermore, speculation is rife regarding potential shifts in US Federal Reserve interest rates, adding to the air of uncertainty. This, coupled with the anticipation of December's job report, has prompted a cautious approach from investors.

In New Zealand, there's a mixed sentiment among economists about the Reserve Bank of New Zealand's (RBNZ) future moves. While some predict a possible change in the cash rate by August, confidence in this forecast remains moderate. Shifting focus to China, New Zealand's key trading ally, Goldman Sachs anticipates that the People's Bank of China might lower the reserve requirement ratio twice in 2024, aiming to bolster the nation's economic rebound.

Specific sectors like consumer durables, energy minerals, and technology services contributed to the NZX 50's decline. Leading the downward trend were companies such as Infratil Ltd., Gentrack Group Ltd., Briscoe Group, and Property for Industry, all experiencing notable drops in their stock values.​

 

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Canadian Dollar Falls Beyond 1.33 USD Mark

Solid ECN – The value of the Canadian dollar has recently dropped, surpassing 1.33 against the US dollar. This decline comes after it had reached a five-month peak at 1.32 on December 26th. Several factors contribute to this shift, including a strengthening US dollar, lackluster economic reports within Canada, and a decrease in foreign currency coming into the country. A notable point of concern is Canada's manufacturing sector, which has experienced its most significant downturn since the 2020 pandemic crash.

This downturn poses challenges for the central bank's efforts to control inflation through tighter policies. Additionally, the Canadian dollar's strength is further weakened by a global reduction in oil demand, which traditionally supports the currency through foreign exchange. Investors are now focusing on the upcoming labor market report, set to be released on Friday, to gain insights into the potential directions of future monetary policy.

 

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Swiss Franc Falls from 12-Year High​

Solid ECN – The Swiss franc dropped to 0.85 against the US dollar, down from a 12-year peak of 0.841. The DXY's recovery influenced this change. Last year, the franc gained 8.5% versus the dollar, reflecting differing interest rate policies of the Swiss National Bank and the Federal Reserve. The Fed's latest meeting hinted at a cautious approach, further affected by US inflation slowing down.

Despite this, the Swiss National Bank sees reasons for higher rates due to potential inflation increases. Currently, inflation in Switzerland is at 1.4%, but predictions show it might reach the 2% goal in mid-2024. This has led investors to believe that the Swiss National Bank will cut rates later than the Fed. Additionally, the franc reached a new high against the Euro, reflecting ongoing high rate expectations from the Swiss National Bank.

 

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Euro Stabilizes Amid Eurozone Inflation and Strong US Job Market​

Solid ECN - The euro maintained a steady value near $1.09. This happened as market players absorbed new information. The Eurozone showed an increase in its inflation rate. At the same time, the US job market was doing well. These developments reduced the need for the European Central Bank and the US Federal Reserve to lower interest rates.

In December, the Euro Area saw its inflation rate go up to 2.9%. This was just below the expected 3%. The main reason for this increase was the cost of energy. The core inflation rate, which excludes energy, also slowed down. It reached 3.4%, the lowest since March 2022.

In the US, the job scene was positive. There were 216,000 new jobs added last month. This was more than the expected 170,000. The unemployment rate stayed the same at 3.7%. However, there was a slight dip in the activity rate. It fell to 62.5%, the lowest since February.​

 

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Pound Steadiness, Consumer Borrowing Spike, and House Price Rise

Solid ECN - The UK's pound currency remained stable at $1.27. This stability came as market players analyzed new economic figures and their effect on global financial policies. A recent report from the US showed an unexpected jump in job creation, suggesting the Federal Reserve might not lower interest rates soon, possibly not even in March. Meanwhile, UK consumer borrowing saw a significant boost, with an increase of £2.0 billion - the most since March 2017 and higher than the £1.4 billion predicted.

Additionally, the number of loans for buying homes in the UK was higher than expected, reaching 50.1K. In other news, Britain's service sector grew stronger in December than initially thought, and the mood among businesses was the most optimistic in seven months. Finally, UK house prices increased by 1.7% compared to last year, the first rise in nine months.​

 

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Libya's Oil Halt Boosts WTI Above $72​

Solid ECN – WTI crude futures rose above $72.5 per barrel on Wednesday, extending gains from the previous session as escalating geopolitical tensions in the Middle East and halted oil production in Libya continued to support oil prices. Libya's Sharara oilfield has stopped oil production since last week due to political protests, removing approximately 300,000 barrels per day from the market.

A prolonged war in Gaza and Houthi attacks on ships in the Red Sea also stoked fears of a broader conflict in the region that could disrupt supply further. Moreover, industry data showed that US crude inventories declined by 5.215 million barrels last week, way above market expectations for a 1.2 million barrel drop. Meanwhile, US gasoline stockpiles rose by 4.9 million barrels, while distillate inventories gained 6.9 million. Investors now look ahead to US EIA data later on Wednesday and the International Energy Agency's monthly market report next week.

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Australian Dollar Rises Amid Cooling Inflation​

Solid ECN – The Australian dollar climbed to nearly $0.67, recovering from its four-week low. This rise occurred despite new data indicating a slowdown in inflation. In November, Australia's CPI grew by 4.3% compared to last year, less than October's 4.9% increase and the smallest since January 2022. The figure was also lower than the anticipated 4.4%.

Given the services sector's robustness, this suggests the Reserve Bank of Australia might not raise interest rates. The market doesn't expect the central bank to increase rates beyond the existing 4.35%. Also, the likelihood of a rate cut in May has decreased to about 36%.​

 

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Belgium's Industrial Output Continues Downward Trend​

In November 2023, Belgium's industrial output dropped 11.7% compared to last year. This marks the 12th month of decline. The fall was steeper than October's revised 6.5% drop. Mining & quarrying saw a 15.9% decrease, worsening from October's 12.4%. Manufacturing also fell by 10.9%. However, the reduction in electricity, steam, and air conditioning supply decreased slightly (20.7% from 22.6%). Month-to-month, the seasonally adjusted industrial production fell by 3.8% after a revised 3.1% rise in the previous month.​

 

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UK Manufacturing Growth Rises in November 2023​

Solid ECN – In November 2023, the UK's manufacturing production increased by 0.4%. This was a change after four months of falling numbers. The growth almost matched the predictions of a 0.3% increase. The most significant boost to the yearly rate was from essential pharmaceuticals and preparations. Their production grew 4.8%, a recovery from a 3.4% drop in October.

Another significant growth was in food, beverages, and tobacco. This sector saw a rise of 1.4%, compared to only 0.1% in the previous month. Looking at the yearly data, manufacturing output grew by 1.3%. This improved from October's 0.2% but fell short of the expected 1.7%.​

 

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Indian Bond Yields Hit 4-Month Low: A Closer Look.​

In January, something notable happened in India's financial market. The yield on the 10-year Indian government bond dropped to 7.15%. This was its lowest point in almost four months. What caused this decline? A mix of positive economic trends and encouraging corporate news played a significant role.

First, let's look at the broader picture. Indian government securities (G-Secs) with a one-year maturity period saw a significant boost. This happened when Bloomberg suggested adding Indian bonds to its index for emerging market local currencies. JPMorgan had already taken a similar step by including Indian bonds in its emerging market debt index. These inclusions are crucial. They make foreign investors more interested in Indian sovereign bonds. When foreign demand goes up, bond yields typically go down.

Now, let's dive into the details. Core inflation is a crucial indicator of economic health. In December, reports from private banks revealed a substantial slowdown in core inflation. This slowdown sparked optimism. Many started anticipating that the Reserve Bank of India (RBI) might cut interest rates within the year. It's important to note, though, that overall headline inflation, as the official statistics office reported, had increased.

Despite this mixed inflation scenario, the RBI seems set to maintain its current policy stance. It's likely to continue the 'Withdrawal of Accommodation' policy in the upcoming meetings. This policy involves gradually reducing monetary support to the economy. While this move might limit the upswing in bond prices, the overall outlook remains cautiously optimistic.​

 

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UK's Producer Price Shift in December 2023​

Solid ECN – In December 2023, the UK saw a slight uptick in factory gate prices for domestically produced goods, marking a year-on-year increase of 0.1%. This change indicates a rebound from the previous month's revised 0.1% decrease and is a notable variance from the anticipated 0.4% growth projected by market analysts. This shift in the producer price index (PPI) is primarily attributed to the rise in prices for various outputs, which contributed the most significant upward push of 0.60 percentage points. Notably, these outputs saw an annual price jump of 2.7%, starkly contrasting their stagnant growth in November.

Further breaking down these changes, significant price increases were observed in specific sectors. Food products, for instance, witnessed a substantial rise of 1.8% in December, compared to no change in the previous month. Similarly, the prices for essential metals saw a considerable jump, reaching 2.7% growth compared to a mere 0.1% in November.

However, these increases were somewhat balanced by continued price drops in other sectors. The prices for coke and refined petroleum products maintained a downward trend, falling by 9.2%, which was even steeper than the 8.2% decrease observed earlier. Likewise, the chemical and pharmaceutical sectors experienced a significant contraction, with prices dropping by 12.8%, a more pronounced decline than the 0.7% fall in the previous period.

On a month-to-month basis, December's output producer prices declined by 0.6%, exceeding market expectations of a 0.2% fall. This decrease marked a change from the stagnant prices observed in the preceding period.

To understand these dynamics, it's essential to consider the broader economic context. The PPI is a critical economic indicator, reflecting the average change over time in the selling prices received by domestic producers for their output. These prices influence the cost of goods sold to consumers and can have ripple effects throughout the economy, affecting inflation, purchasing power, and overall economic health.

As investors and policymakers analyze these figures, it's essential to consider the complex interplay of various sectors and their impact on the economy. The fluctuating prices in key areas like food, metals, and petroleum products can signal changes in supply and demand, production costs, and broader market trends.​

 

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Overview of Canadian Retail Sales Surge​

Soldi ECN – In December 2023, Canada's retail sector witnessed a notable surge, marking the most significant monthly increase in nearly a year. Preliminary estimates suggest an 0.8% rise from the previous month, indicating a robust recovery and the sharpest upswing since the early months of the year. This increase contrasts sharply with November's performance, where retail sales experienced a slight decline of 0.2%. This decline, revised from an initial estimate of stagnation, followed a modest 0.5% gain in October, further highlighting the volatility and unpredictability in the retail sector.
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Sector-Specific Trends in Retail​

The dynamics of this surge are intriguing, particularly when examining specific retail categories. Certain sectors witnessed a downturn, contributing to the overall fluctuating landscape of retail sales. Food and beverage retailers saw a decline in sales by 1.4%, while general merchandise retailers experienced an even steeper drop of 1.8%. Similarly, sporting goods and miscellaneous retailers faced a minor setback with a 0.3% decrease in sales. These declines collectively pushed the core retail activity to a sharper fall of 0.6%, painting a complex picture of the retail environment.
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Positive Shifts in Key Areas​

Despite these declines, some sectors showed resilience and growth, balancing the overall retail picture. Gasoline stations, for instance, recorded a slight increase in turnover by 0.3%, which was particularly notable given the offset against a backdrop of declining prices. This was complemented by a significant increase in volume terms, up by 2.2%. Additionally, the motor vehicle and parts dealers sector saw an uptick in retail turnover, rising by 0.5%. These positive shifts in key retail areas provided a counterbalance to the declines in other sectors, underscoring the diverse and dynamic nature of the retail industry.
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Year-on-Year Retail Growth Analysis​

On a year-on-year basis, the retail landscape also presents an interesting narrative. While retail sales expanded by 1.8% compared to the previous year, this growth rate indicates a slowdown from the 2.2% increase in October. This deceleration suggests a changing economic environment and possibly shifting consumer behaviors. It reflects the challenges and opportunities within the Canadian retail sector as businesses and policymakers navigate the complexities of market trends, consumer preferences, and broader economic factors. The retail sector's performance is a critical indicator of financial health, influencing employment, investment decisions, and overall economic activity.​