Market Update

US Inflation Shows Moderate Trends
In the US, inflation remained a key focus as the core Personal Consumption Expenditures (PCE) price index—a preferred measure for the Federal Reserve—rose 2.8% year-on-year and 0.3% month-on-month in October. This data underscores moderate underlying inflation, offering little impetus for an immediate change in monetary policy. Recent remarks from Fed officials suggest a steady approach, with no urgency to lower interest rates as long as the labour market remains robust and the broader economy continues to show resilience.
Eurozone Inflation Edges Higher
Inflation in the eurozone ticked upward for the second consecutive month, with the headline rate rising to 2.3% in November from 2.0% in October. The increase was primarily attributed to the diminishing impact of last year’s energy price declines. Core inflation held steady at 2.7%, while inflation in the service sector eased slightly to 3.9%. Markets widely expect the European Central Bank (ECB) to reduce borrowing costs in December, though the extent of the cut remains uncertain as policymakers weigh economic conditions.
Chinese Markets Advance on Policy Optimism
Chinese equities gained ground last week, buoyed by optimism around government stimulus measures despite concerns over potential US tariff increases. The Hang Seng Index rose, supported by a ¥900 billion liquidity injection from the People’s Bank of China (PBOC) through its medium-term lending facility, with the rate maintained at 2%. Manufacturing activity showed signs of improvement, as the PMI climbed to 50.3—its highest level since April—driven by stronger new orders and export demand. Business confidence also reached a seven-month high, reflecting cautious optimism even as broader economic challenges persist. Investors are closely monitoring potential additional stimulus measures from Beijing ahead of President-elect Trump’s inauguration next month.
Oil Prices Retreat Amid Easing Supply Concerns
Oil prices fell approximately 3% last week as fears over supply disruptions related to the Israel-Hezbollah conflict subsided and expectations of increased production in 2025 weighed on the market. OPEC+ postponed its policy meeting to December 5, where further production cuts are expected to be discussed. The group recently revised its forecast for global oil demand growth for 2024 and 2025 downward, citing economic challenges in major importing nations such as China and India.