The UK has presented a fall budget. OPEC+ postponed the meeting to November 30

US economic news on Wednesday was mostly better than expected and favorable for the dollar. Weekly initial jobless claims fell by 24,000 to a 5-week low of 209,000, indicating a stronger labor market than expected at 227,000. Additionally, the University of Michigan Consumer Sentiment Index for November was revised upward by 0.9 to 61.3, stronger than expectations of 61.0. The University of Michigan’s US expected inflation index for November surprisingly rose by 0.1 to a 7-month high of 4.5%, beating expectations of no change at 4.4%.

A positive factor for equities was a slight easing of geopolitical risks in the Middle East after Hamas agreed to release 50 hostages from the Gaza Strip in exchange for a four-day ceasefire with Israel and the release of 150 Palestinian prisoners.

The Eurozone consumer confidence indicator for November rose by 0.9 to minus 16.9, stronger than expectations of minus 17.8. ECB Vice President Gindos said yesterday that investors may not fully appreciate the risk of a bigger hit to the Eurozone economy from an interest rate hike. His counterpart, ECB Governing Council representative and Bundesbank President Nagel said the following: “I believe we are close to the level seen as terminal rate, and ECB interest rates will stay where they are for a while.”

UK Chancellor Jeremy Hunt delivered his fall budget yesterday. The main changes were taxes, namely the percentage of national income tax that 27 million people in the UK will be subject to was reduced. Welfare payments and pensions were also increased. At the same time, the UK intends to reduce the rate of government borrowing relative to the rate of economic growth — the OBR forecasts that debt as a percentage of GDP will fall over most of the forecast period, approaching the low 90% level. In addition, businesses will be able to recognize investment expenditures in full on an ongoing basis. Potentially, this will attract around £20 billion of investment per year. In turn, the OBR has provided updated growth forecasts for the UK economy, which have been revised down significantly. In 2024, growth is expected to be a meager 0.7% vs. the previous 1.8%, and in 2025, growth is expected to be 1.4% vs. previous estimates of 2.5%.

Crude oil prices fell more than 1% on Wednesday after an OPEC+ meeting scheduled for this weekend was postponed until November 30 as talks ran into problems amid Saudi Arabia’s dissatisfaction with the level of oil production by other organization representatives. Delegates said Saudi Arabia is engaged in complex negotiations with Angola and Nigeria, which want higher oil production levels than what other OPEC+ countries would agree to. Disagreements among OPEC+ countries over production levels make it less likely that the group will extend oil production cuts or go for deeper cuts. Oil prices declined due to a stronger dollar and a weekly EIA report showing crude inventories rose more than expected.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) gained 0.29%, China’s FTSE China A50 (CHA50) decreased by 0.32% on Wednesday, Hong Kong’s Hang Seng (HK50) closed at its opening price and Australia’s ASX 200 (AU200) ended Wednesday negative 0.07%. Today is a bank holiday in the US and Japan, so low trading volume is expected.

Goldman Sachs made a positive outlook for China in 2024. Goldman Sachs analysts believe that Chinese stocks will perform positively in 2024, especially if Beijing takes additional measures to stimulate the economy. Analysts were particularly positive on Chinese blue chip stocks in the CSI 300 index.