Global News Update: 7-12 October 2024

United States

Economic Growth and Jobs: The US economy showed resilience with non-farm payrolls increasing by 254,000 in September, exceeding forecasts of 140,000, and the unemployment rate falling to 4.1%. These figures reinforced expectations for a 25bps rate cut by the Federal Reserve in November, although Fed officials showed differing views on the pace of future cuts.

Stock Market Rally: The S&P 500 reached an all-time high of 5,800, driven by strong bank earnings. JPMorgan reported a rise in net interest income, while Wells Fargo expects improvement despite a decline. Tesla’s stock dropped 8.8%, but Uber and Lyft surged over 9.5%.

Bonds and Treasuries: The U.S. 10-year Treasury yield rose slightly to 4.09%.

Cryptocurrency and Commodities: Bitcoin rose 5.5% to $63,022.34, Ether increased 3.8% to $2,457.29, while WTI crude dropped 0.4% to $75.58 per barrel. Gold increased by 1% to $2,656.29 per ounce.

United Kingdom

Fiscal Policy and Debt Securities: Ahead of the Budget, UK executives increased sales of shares in anticipation of a rise in capital gains tax as part of Chancellor Rachel Reeves’ efforts to strengthen public finances. The Institute for Fiscal Studies (IFS) advised against sharply increasing government borrowing for public investment, noting that the government could increase investment spending by over £50bn by targeting broader public finance metrics. Long-term borrowing costs rose, reflecting investor concerns about the Labour government’s fiscal plans.

Eurozone

Economic Growth and Inflation: Germany forecasted a 0.2% contraction in 2024, with a recovery expected in 2025, marking its first two-year recession since the early 2000s. French public-sector spending cuts and tax increases worth €60 billion were proposed to address a widening deficit. ECB chief economist Philip Lane stated that rate cuts may be needed if economic forecasts are overly optimistic, but also suggested a cautious approach if inflation proves resilient. The ECB is preparing for possible rate cuts as inflation is projected to approach the 2% target by mid-2025.

Japan

Monetary Policy: The Bank of Japan signaled its intent to continue raising interest rates if the economy performs in line with projections. Deputy Governor Ryozo Himino reaffirmed the bank’s stance of gradually unwinding its accommodative policies, despite the installation of a new government.

China

Economic Stimulus: China’s stock market rally slowed as expectations for additional stimulus from Beijing were unmet. The People’s Bank of China established a swap facility to provide liquidity for institutional investors, aiming to support equity markets as part of a broader stimulus package.

New Zealand

Fiscal Policy: New Zealand’s annual budget deficit widened to NZ$12.85 billion ($8 billion) due to inflationary pressures driving up government service costs. The new government is enacting austerity measures, including public sector layoffs and reduced spending, but is hindered by weak economic growth and reduced tax revenues.

AI

Technological Advancements: OpenAI secured a $4 billion revolving credit line as part of its expansion and plans to restructure as a public benefit corporation to defend against hostile takeovers. Amazon launched a new AI tool to improve delivery efficiency by helping drivers identify packages, while AMD announced the release of its MR325X AI chip, expected to outperform Nvidia’s current-generation AI hardware.

ESG

Energy Management: In the UK, households and businesses are set to be offered payments to reduce electricity usage during periods of tight supply, a move designed to ease strain on the power grid as the country increasingly relies on renewable energy sources like wind and solar.

Summary

From 7 to 12 October, key developments in global markets were driven by positive economic data in the US, anticipated fiscal changes in the UK, and recession risks in the Eurozone and Japan. Inflation remained a central concern for policymakers, while the AI sector saw new technological advancements and strategic expansions. Meanwhile, China and New Zealand faced ongoing economic challenges, while ESG initiatives continued to shape energy policy in the UK.