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BOV Market Watch - Week ending 2nd December 2022
02 Dec 2022

Eurozone consumer prices rise less than expected in November. Inflation in the eurozone slowed for the first time in one and a half years, offering a glimmer of hope to the European Central Bank (ECB) in its efforts to combat the worst consumer-price shock in a generation. Initial data published on Wednesday from Europe’s statistics office Eurostat showed headline inflation running at an annual rate of ten percent in November, representing a 0.6 percentage point drop from October. The energy and food component continued to contribute to the sky-high inflation figures, but with a noticeable drop in the former. Energy is expected to have stood at an annual rate of 34.9 percent in November, compared with 41.5 percent in October, according to Eurostat. However, ECB President Christine Lagarde warned on Monday that inflation in the eurozone has not peaked and risks rising even higher than predicted.

Jerome Powell Signals Fed Prepared to Slow Rate-Rise Pace in December. Federal Reserve (Fed) Chair Jerome Powell confirmed on Wednesday that smaller interest rate hikes are likely in the months ahead, even as he sees progress in the fight against inflation as largely insufficient. “It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Mr Powell said in a speech in Washington. “The time for moderating the pace of rate increases may come as soon as the December meeting.” Investors have been closely watching for any signal by the Fed that it is about to slow or even pause its stringent schedule of rate hikes and somewhat release the brakes the central bank has applied to cool the economy.

UK mortgage approvals drop more than expected. The number of mortgages approved by lenders in the UK fell in October to the lowest since June 2020, soon after the onset of the Covid-19 pandemic. Bank of England (BOE) data made public on Tuesday indicate that a sharp downturn in the UK’s housing market is under way. Lending approvals for house purchases, an indicator of future borrowing, declined more than expected to 58,977 in October from 65,967 in September, the data showed. Economists had predicted 60,200. The figures cover the period immediately after the 23rd September mini-budget that sent the markets into turmoil and forced the BOE to intervene in order to stabilise the market.

China’s factory and services activity contracts again in November. China's manufacturing and services activities saw more contraction in November, dipping to seven-month lows, official data showed on Wednesday. Output was hit by the country's strict Covid-19 restrictions and rising infections that analysts expect will hurt the economy well into 2023. China’s manufacturing Purchasing Managers’ Index (PMI) fell to 48 compared with 49.2 in October, the data showed. In the meantime, the non-manufacturing PMI, which covers the services sector, fell to 46.7 down from 48.7 in October. “The China NBS purchasing managers’ indices survey suggested manufacturing activity worsened in November on tightened Covid curbs and weak demand,” said analysts at Goldman Sachs.

India’s manufacturing hits three-month high in November. India's manufacturing activity grew at the fastest pace in three months, as output and new orders growth accelerated amid cooling price pressures, survey data published by S&P Global showed on Thursday. The Manufacturing PMI, compiled by S&P Global, rose to 55.7 last month from with 55.3 in October, signalling the strongest improvement in operating conditions in three months. For the 17th consecutive month, the index remained above the 50-point mark which separates expansion from contraction. The data also revealed that firms were strongly confident towards growth prospects.

In case of any queries, please email us on [email protected] or call 2275 3857.

 

 

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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).