Germany’s economic outlook showed signs of improvement in October, breaking a four-month decline, according to the ifo Business Climate Index.

The Index climbed to 86.5 from 85.4 in September, offering cautious optimism that the country’s economic contraction might be levelling off.

The uptick, reported by the ifo Institute, reflects a slight rebound in business confidence, although lingering scepticism and challenges in the manufacturing sector temper the outlook.

ifo President Clemens Fuest in a statement,

This is the first increase after four decreases in a row. Companies were more satisfied with their current situation. Expectations were brighter but marked by skepticism. The German economy stopped the decline for the time being.

Germany, once the economic engine of Europe, has been facing a serious downturn.

The country’s economy has hit a rough patch, marked by sluggish growth, a shrinking workforce, controversial decisions and structural challenges that threaten its reputation and long-term stability.

Service sector boosts outlook amid manufacturing struggles

Growth in Germany’s service sector contributed significantly to the improvement.

Service companies reported a more favourable business environment, with notable strength in logistics, tourism, and IT.

These gains offset the struggles in manufacturing, where order volumes remained subdued.

Although manufacturers are less pessimistic about future demand, they reported a worsening assessment of current business conditions.

Capacity utilization fell to 76.5%, well below the long-term average of 83.4%, highlighting the sector’s continued pressure from high energy costs and cautious consumer demand.

The ifo Index’s rise aligns with an S&P Global survey this week, which found a slower contraction in private-sector activity.

Bundesbank echoed this sentiment, projecting that Germany’s GDP would remain flat in Q4, following a mild recession earlier this year.

Challenges continue as IMF forecasts 2024 contraction

Despite the improvement in business sentiment, the International Monetary Fund (IMF) released a sobering forecast earlier this week, expecting Germany’s economy to contract by 0.3% in 2024 and remain stagnant into 2025.

“Persistent weakness in manufacturing is weighing heavily on growth for countries such as Germany and Italy,” the IMF noted, pointing to strains in industrial output and real estate markets.

Adding to Germany’s concerns, automaker Volkswagen recently warned of potential job cuts and production line closures for the first time in its 87-year history.

The announcement underscored the struggles facing Germany’s export-oriented economy, especially in sectors like automotive, which are vulnerable to fluctuations in global demand.

While October’s figures provide hope for a stabilizing economy, German businesses still face significant headwinds.

Political uncertainties, including the potential for new trade tensions stemming from the upcoming US elections, add another layer of unpredictability.

The post Germany’s business confidence looks up in October, ifo data shows appeared first on Invezz

In an unexpected move, the Bank of Russia has announced a significant hike in its key interest rate, indicating a proactive approach to tackling economic challenges.

This decision has major implications for both local and international markets.

Let’s take a closer look at the details surrounding this important development.

During its October 2024 meeting, the Bank of Russia announced a historic move to raise its benchmark interest rate by 200 basis points, bringing it to 21 per cent.

This hike was significantly more than the market’s expectation of a 100 basis point increase, highlighting the gravity of the current economic situation.

Despite several hurdles, the central bank’s measures demonstrate a determined attempt to battle inflation and maintain economic stability.

Reasons for the rate hike

The Bank of Russia provided several justifications for this dramatic increase in interest rates.

A primary reason is the ongoing inflationary pressures, which have exceeded previous forecasts.

This inflation surge is largely due to strong domestic demand that has stretched the Russian economy’s capabilities, compounded by Western sanctions and a labour shortage partially caused by the dispersal of military-aged males.

Economic impact and policy outlook

The recent interest rate hike has set a new record, surpassing the previous peak set in response to Russia’s invasion of Ukraine in 2022.

The central bank’s move demonstrates its commitment to addressing inflation and economic imbalances immediately.

Furthermore, it has hinted at the likelihood of additional rate hikes at the next meeting in December, reinforcing a proactive and attentive monetary policy strategy.

Inflationary concerns and fiscal policies

Rising inflation expectations have been further aggravated by worsening trade conditions and the expansive fiscal policies laid out in the 2024 Federal Budget.

These elements have contributed to increasing inflationary pressures and highlighted the necessity for decisive monetary actions to stabilize the economy and mitigate rising prices.

The Bank of Russia’s bold decision to boost its benchmark interest rate to a historic high reflects a targeted approach for addressing economic issues and maintaining stability in the face of mounting pressures.

The implications of this decision are expected to reach beyond Russia’s borders, influencing global investors and governments.

As the central bank prepares for additional policy changes in the coming months, many will be looking intently to see how these steps will shape Russia’s economic destiny amidst continued complications.

Economic forces shaping the Russian Ruble and monetary policy

The Russian ruble is currently under significant pressure, trading below 96 per USD and approaching a year-long low of 97.5.

This comes despite the Federal government’s interventions and the Bank of Russia’s aggressive monetary stance.

The government’s gradual easing of capital controls has somewhat offset the central bank’s efforts, complicating the currency’s stability.

Additionally, sanctions against the Moscow Exchange have exacerbated difficulties for export-focused businesses, limiting their access to foreign currency for their operations.

In response, the Federal government has implemented a reduction in mandatory conversion rates for major exporting companies, which has led to a decreased demand for rubles.

Complicating matters further, worries about the state of the Chinese economy have weakened international demand for Russian products, placing extra strain on the ruble.

To combat rising inflation expectations, the Bank of Russia significantly raised its key interest rate to an unprecedented 21% in October.

The situation illustrates the intricate relationship between domestic policies and international pressures that are influencing Russia’s economy.

As the ruble continues to face these external challenges and internal policy shifts, the country must carefully navigate a difficult financial landscape to maintain economic stability.

The post Bank of Russia surprises markets with 200bps rate hike to record high appeared first on Invezz

Gold prices fell on Friday as a stronger dollar and rise in Treasury yields weighed on investors’ sentiment. 

Though gold traded in the red on Friday, prices were still on track to notch up some mild weekly gains.

This will mark the third consecutive week of gains for gold. 

Other precious metals such as palladium extended its heavy gains from the previous session due to risk to supply. 

Among industrial metals, copper futures on the London Metal Exchange fell sharply by half a percentage.

Gold underpinned by safe-haven demand

Even as gold prices are down, the yellow metal is underpinned by geopolitical tensions and uncertainties surrounding the US Presidential elections. 

In the Middle East, escalating tensions have increased safe-haven flows for gold.

Reuters reported on Friday that three Lebanese journalists were killed by a bombing of a guesthouse used by members of the international press. 

This comes amid US Secretary of State Anthony Blinken’s visit to Doha, where he is scheduled to meet representatives from Israel and Qatar. 

However, senior Hamas official Osama Hamdan told Lebanese pro-Hezbollah news agency Al-Mayadeen there was no change in the group’s position. 

At the time of writing, the most-active December gold contract on COMEX was $2,741.60 per ounce, down 0.3% from the previous close. 

US election keeps traders on toes

Adding to the series of developments in the Middle East is the news that Republican candidate Donald Trump is edging ahead in his battle with Vice President Kamala Harris. 

According to reports, Trump is ahead in key states such as Wisconsin and North Carolina.

“This suggests he has a good chance of winning the US presidential election,” Joaquin Monfort, author at Fxstreet.com, said in a note.

“A Trump win would upset the existing geopolitical order and potentially increase safe-haven flows despite his claims to end conflicts worldwide in a matter of days,” Monfort said. 

Copper falls on strong dollar

Copper prices on LME fell on Friday, and were set for a fourth consecutive week of losses. 

A stronger dollar makes commodities priced in the greenback more expensive for holders of other currencies, limiting demand. 

Copper traders were also doubtful if China’s latest stimulus measures could prop up demand for the red-metal in one of the top consumers. 

A meeting of China’s National People’s Congress, which was supposed to provide more cues on stimulus measures, has been delayed till November from late-October, according to a Reuters report. 

At the time of writing, the three-month copper contract on LME was at $9,533.50 per ton, down 0.4% from the previous close. 

Palladium extends gains

Futures contracts of palladium rose for the second-consecutive trading day on Friday as risks to supply boosted sentiments in the market. 

According to informed sources, the US government is set to call on the rest of the G7 to impose sanctions on Russian palladium.

This has been supporting the upswing in prices. 

The palladium contract on the New York Mercantile Exchange jumped 9% at times on Thursday to reach its highest level since December last year. At present, prices were 0.4% higher at $1,168 per ounce. 

Russia has a dominant position in the palladium market, with one company supplying 40% of the world’s mine supply, according to Commerzbank AG. 

Barbara Lambrecht, commodity analyst at Commerzbank, said in a note:

The EU, which imports about half of its palladium, obtained about a third of its imports from Russia in 2021.

The share is likely to have declined, but is likely to remain significant. 

The post Gold and copper slip as dollar firms; palladium extends gains appeared first on Invezz

In October, Brazilian consumer confidence suffered a small but significant shift in attitude, as seen by the seasonally adjusted FGV-IBRE Consumer Confidence Index falling by 0.7 points to 93.

This adjustment comes after four months of consistent increase, which propelled the index to its highest level in a year.

The divergent fluctuations in the sub-indices provide a nuanced picture of customer attitudes, with future expectations falling and current ratings rising.

Diverging trajectories point towards a complex interplay of factors

The diverging trajectories of the Expectations Index and the Current Situation Index in October point towards a complex interplay of factors shaping consumer confidence.

The Expectations Index, a key metric reflecting consumers’ predictions for the future economic environment, declined by 2.5 points to 99.7.

This marked decrease comes after a series of four consecutive months of positive results, underscoring a notable change in sentiment towards the upcoming months.

On the other hand, the Current Situation Index, which gauges consumers’ perceptions of the present economic conditions, witnessed a 2.0-point increase to 83.7.

This upturn propels the index to its highest level since December 2014 and signifies a more favourable assessment of the current economic landscape by Brazilian consumers.

Analyzing Inflation trends in Brazil: Insights from September

In September, Brazil saw its annual inflation rate rise modestly to 4.42%, just above the market expectation of 4.43%.

This uptick from 4.24% in August was largely attributed to faster price increases in critical areas such as food and beverages, housing and utilities, and healthcare.

While there was a slight decrease in prices related to transportation and personal expenses, the overall trend in inflation stayed stable.

Key factors contributing to the rising inflation included higher costs in housing—especially residential electricity—as well as food and beverages.

There were also minor increases in transportation costs, mainly influenced by airfares and ethanol prices.

In September, consumer prices in Brazil climbed by 0.44% compared to the previous month, following a small dip in August.

This change was generally in line with what the market had anticipated, reflecting a robust inflationary environment.

Significant shifts in specific sectors like housing, food and beverages, and transportation highlighted the complex factors at play in Brazil’s inflationary landscape.

In light of these changes, ongoing careful observation and strategic economic management will be essential for navigating the shifting inflationary conditions and maintaining economic stability.

Challenges and opportunities ahead

The contrasting movements in the Expectations Index and the Current Situation Index illuminate the challenges and opportunities that lie ahead for Brazilian consumer confidence.

While the positive upswing in current evaluations bodes well for the immediate economic outlook, the decline in future expectations signals potential obstacles on the horizon.

Balancing these factors and understanding their implications is crucial for policymakers and businesses seeking to navigate the evolving consumer sentiment landscape.

Consumer confidence serves as a vital barometer for economic decision-making and spending patterns.

A decline in confidence levels can ripple through various sectors of the economy, influencing demand, investment, and overall economic activity.

Indicators show the need for closer monitor

The fluctuations in consumer confidence underscore the need for policymakers and industry stakeholders to closely monitor economic indicators and tailor strategies to shore up consumer sentiment.
Policymakers face the task of interpreting the mixed signals in the FGV-IBRE Consumer Confidence Index and devising targeted interventions to bolster consumer confidence.

By addressing underlying concerns, fostering transparent communication, and implementing measures to enhance future expectations, policymakers can catalyze a more resilient and optimistic economic environment.

As Brazil grapples with shifting consumer sentiment, it becomes imperative to focus on strategies that instill confidence in the economy.

Transparency in policymaking, clear communication of economic strategies, and targeted interventions to address consumer concerns can play a pivotal role in rebuilding trust and optimism among consumers.

What’s at stake?

Overall, the October 2024 FGV-IBRE Consumer Confidence Index in Brazil reflects a dynamic consumer sentiment landscape characterized by mixed signals.

While the decline in expectations poses challenges, the uptick in current evaluations presents opportunities for economic growth.

Navigating this nuanced terrain requires a multifaceted approach that acknowledges and addresses both the challenges and opportunities shaping Brazilian consumer confidence.

The post Brazilian consumer confidence dips in October, revealing mixed signals appeared first on Invezz

US benchmark equity averages rose on Friday as the market ended a three-day losing streak. 

At the time of writing, the Dow Jones Industrial Average was up 0.3%, while S&P 500 rose 0.8% from the previous close.

The Nasdaq Composite gained more than 1.3% on Friday. 

Nasdaq and S&P 500 ended in the green on Thursday buoyed by positive earnings results of Tesla and as Treasury yields fell in the US. 

The 10-year Treasury yield fell from its three-month highs touched on Wednesday. 

Shares of Centene and Microsoft rise

Shares of Centene are rallying after the health insurer’s third quarter profits exceeded expectations, driven by rate increases in Medicaid programs and higher membership in its health insurance exchange business. 

Microsoft’s stock gained after Chief Executive Officer Satya Nadella was given a pay package worth over $79 million for fiscal year 2024, a 63% increase from last year.

The package would have been $5 million higher if Nadella had not taken a pay cut to reflect cybersecurity risks in the company. 

Meanwhile, shares of Colgate-Palmolive fell on Friday despite beating third-quarter earnings expectations and raising guidance. 

Viking Therapeutics’ stock soars

Shares of Viking Therapeutics surged nearly 10% on Friday after the biotech company’s third quarter earnings beat analysts’ expectations. 

According to Yahoo Finance, Wall Street currently holds 13 buy ratings on the stock. 

Additionally, shares of Deckers Outdoor surged 14%, following its robust earnings results.

Deckers posted earnings of $159 per share, comfortably beating expectations of $124 per share earnings by analysts from LSEG. 

Meanwhile, shares of real estate investment trust Digital Realty Trust surged 11% before the opening bell after reporting record lease bookings for the third quarter.

Capri Holdings slump, while Tapestry rise

The stock of Capri Holdings slumped over 40% after a US judge blocked a pending merger. 

The merger was set to take place between the parent company of Michael Kors and Jimmy Choo and handbag maker Tapestry. 

Shares of Tapestry soared 15% on Friday. 

Additionally, shares of Apple fell nearly 1% before recovering all of its losses on Friday after data showed that iPhone sales in China fell in the third quarter, suffering from severe domestic competition. 

Positive economic data from the US

New orders for key US-manufactured capital goods increased more than expected in September. 

Additionally, investors will be monitoring the release of the GDP data from the US for the third quarter. 

Also, the monthly jobs report from the US will be released.

Traders will focus on the data, especially after the previous report came in hotter-than-expected.

That led to reduced bets for an oversized US Federal Reserve interest rate cut. 

Crude heads for weekly gains

Crude oil prices were on track for weekly gains after dropping by 7% last week. 

Oil prices were on the rise on increasing geopolitical tensions in the Middle East and uncertainties ahead of the US Presidential elections. 

At the time of writing, Brent crude prices were up 2.1% at $75.94 per barrel, while West Texas Intermediate oil was at $71.71 per barrel, up 2.2% from the previous close. 

The post S&P 500, Nasdaq rise sharply ending 3-day losing streak; Viking Therapeutics surge, while Capri’s shares slump appeared first on Invezz