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BOV Market Watch - Week ending 9th December 2022
09 Dec 2022

US services sector surges unexpectedly in November. Activity in the US services sector accelerated unexpectedly in November, with employment rising, signalling underlying momentum in the economy as it braces for an anticipated recession next year. The Institute for Supply Management’s (ISM) measure of services rose to 56.5 last month from 54.4 in October, according to a report released on Monday. Readings above 50 signal expansion, and the median projection by analysts was 53.5.  Survey participants said that increased capacity and shorter lead times have continued to improve supply chain and logistics performance, noted ISM’s Anthony Nieves, adding that that the sector also got a boost from the new fiscal year and holiday season, which have contributed to stronger business activity and higher employment.

UK house prices fall at fastest rate in 14 years in November, says Halifax. House prices in the UK tumbled at the fastest pace since October 2008, the height of the financial crisis, as rising mortgage rates made buying a new house less affordable. House prices fell by 2.3 percent month-on-month in November following a 0.4 percent decline during the prior month. Other measures of house prices have also indicated that a slowdown is underway, with household budgets tightened by runaway inflation and soaring borrowing costs. In annual terms, house price growth decelerated to 4.7 percent in November from 8.2percent in October. “While a market slowdown was expected given the known economic headwinds – and following such extensive house price inflation over the last few years, +19percent since March 2020, this month’s fall reflects the worst of the market volatility over recent months” director of Halifax Mortgages, Kim Kinnaird, said.

China inflation climbs 1.6 percent In November. China’s inflation eased further in November, data by the National Bureau of Statistics showed on Friday, as COVID-related disruptions hampered economic activity. Lower food prices saw China’s consumer price index rise by 1.6 percent in November from a year earlier, in line with expectations and down from 2.1 percent growth in October. The inflation readings come on the heels of data that showed a sustained decline in Chinese business activity.

India's Central Bank Delivers Fifth Consecutive Rate Hike. Signalling a further rise in lending and deposit rates, the Reserve Bank of India (RBI) on Wednesday hiked the key policy rate, the repo rate or the rate at which the RBI lends to banks in a bid to control retail inflation. The RBI monetary policy committee (MPC), which determines interest rates, raised the policy repo rate by 35 basis points to 6.25 percent with immediate effect. “India is seen as a bright spot in an otherwise gloomy global outlook but global spillovers continue to impart volatility,” RBI governor Shaktikanta Das said. The RBI has hiked repo rates five times so far this year, starting with a 40 bps hike in May, followed by three consecutive 50 bps hikes each in June, August, and September.

Reserve Bank of Australia raises interest rates for eighth straight month. The Reserve Bank of Australia (RBA) raised its key interest rate on Tuesday, by a quarter-point for a third consecutive policy meeting, thereby slowing the pace of rate hikes from a more aggressive 50 basis points previously, as policymakers turned less hawkish amid expectations for slower economic growth ahead. If passed on in full to borrowers, the rate hike will add around 75 Australian dollars to the monthly repayments of a household with a 500,000-dollar mortgage debt on a 25-year term. RBA Governor Philip Lowe said inflation remained too high at 6.9 percent, far above the target of 2-3 percent.

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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).