Market Update

The week concluded on a positive note for markets, as illustrated in the accompanying chart, with widespread gains across various sectors.
Within the Eurozone, Q3 GDP contracted by 0.1%, marking the first decline since Q4 of 2022. Notably, household consumption expenditure and Government final consumption expenditure contributed positively, each increasing by 0.3%. However, the overall decline in GDP was attributed to a significant reduction in inventories and a downturn in economic sentiment. Analysts, echoing recent comments from ECB President Christine Lagarde, anticipate a slowdown in spending growth in the fourth quarter, followed by a resurgence in 2024.
In the United States, highly anticipated labor market data revealed a drop in the unemployment rate to 3.7% in November 2023, down from 3.9% the previous month. The economy added 199,000 jobs during the month, surpassing the 150,000 added in October. Despite the Federal Reserve's 5.50% increase in interest rates since early 2022, the labor market has remained robust, playing a pivotal role in maintaining overall economic stability. Some market participants expressed disappointment, hoping for signs of a cooling labor market, indicative of the Fed's success in tempering inflation.
Japan's Q3 GDP figures fell below expectations, revised to an annualized -2.9% compared to the preliminary -2.1%. The decline was primarily attributed to a softening in personal consumption, possibly influenced by a sustained decrease in real disposable income. Bank of Japan Governor Kazuo Ueda announced plans to closely monitor wage growth outlook and domestic demand strength in the coming year, using these factors to guide monetary policy.
Looking ahead, markets eagerly anticipate key interest rate decisions from the Federal Reserve, Bank of England (BoE), and European Central Bank (ECB) in the upcoming week. Current expectations suggest that policymakers will maintain existing interest rates. Additionally, upcoming economic releases include US Consumer Price Index (CPI), Producer Price Index (PPI), and retail sales, while the UK anticipates labor market data, the unemployment rate, and month-on-month GDP for October. China is also set to release industrial production and retail sales figures.