The lose-lose situation

In the US, predictions for a December rate cut by the Federal Reserve continued to divide opinion, while investors continued to take profit from the artificial intelligence (AI) rally. This was despite stellar earnings from Nvidia, which beat analyst expectations at the top and bottom lines while also projecting higher revenue in the future than anticipated.

However, the company’s stock fell nearly -6% during the week, prompting an interesting comment from CEO Jensen Huang to his employees regarding the market’s scepticism: “If we delivered a bad quarter, it is evidence there’s an AI bubble. If we delivered a great quarter, we are fuelling the AI bubble”.

In economic news, the long-awaited US non-farm payrolls report for September showed that 119,000 jobs were added during the month, beating expectations for 50,000, while the unemployment rate rose from 4.3% to 4.4%, its highest since October 2021.

Elsewhere, it was reported that the UK CPI inflation rate fell from 3.8% to 3.6% in October, in line with market expectations.  In the Eurozone, the inflation rate fell from 2.2% to 2.1% in October, remaining close to the ECB’s 2% target. Business activity in the currency bloc continued to show steady growth as the HCOB Composite PMI declined slightly from 52.5 to 52.4 in November, remaining above the 50.0 level that indicates growth for the 11th month in a row.

Services sector activity was particularly impressive, expanding at its fastest pace in 18 months.  The price of gold remained relatively flat during the week having been pulled both ways by growing safe-haven demand and a strengthening US dollar, which hovered around 6-month highs. 10-year bond yields in Europe and the US also fell as investors sought safety from volatility in equities.

Equities

Global stocks finished down -1.4% in euro terms and down -2.3% in local terms last week. Year-to-date global markets are up by 4.3% in euro terms and up by 15.8% in local terms. The US market, the largest in the world, finished down at -1.0% in euro terms and down at -2.0% in local terms.

Fixed Income & FX

The US 10-year yield finished at 4.1% last week. The German equivalent finished at 2.7%. The Irish 10-year bond yield finished at 2.9%. The Euro/US Dollar exchange rate finished at 1.15, whilst Euro/GBP finished at 0.88.

Commodities

Oil finished the week at $58 per barrel and is down -27.2% year to-date in euro terms. Gold finished the week at $4,065 per troy ounce and is up 39.3% year-to-date in euro terms. Copper finished the week at $10,779 per tonne and is up 12.0% year-to-date in euro terms.

The week ahead

Tuesday 25^th November

US consumer confidence index for November is reported.

Wednesday 26^th November

The next UK budget will be delivered.

Friday 28^th November

German CPI index for November is released.