Markets Extend Gains as US Retail Sales and PPI Cools

  • Market Overview

Most markets continued to trade in the green on Wednesday after the latest US data showed that both Producer Price Inflation ( PPI ) and retail sales decreased. According to Trading Economics: “US producer prices declined 0.50% in October, the biggest drop since April 2020, signaling inflationary pressure continued to ease. However, another report showed retail sales went down 0.10%, less than market expectations of a 0.30% fall, and prior months were upwardly revised.” This caused gains in the financial and material sectors which helped Wall Street to close up yesterday.

European markets also extended gains after stocks continued to “benefit from hopes that the Federal Reserve and other key central banks will refrain from delivering additional rate hikes. Investors (also) welcomed data showing that the UK's inflation rate slowed more than expected in October amid lower energy prices, while the US PPI unexpectedly fell by a considerable amount from the previous month to magnify the US disinflation trend (after) soft CPI (data the day before). In the meantime, fresh forecasts from the EU Commission downgraded the EA's GDP growth to 0.60% this year,” added Trading Economics.

The FTSE/JSE All Share Index (ALSI) benefitted from the positive market sentiment gaining 1.85%, as investors welcomed lower-than-expected producer inflation from the US. The rand continued with its strong trajectory, firming to R18.19/$ at 22h30 local time.

The Hang Seng climbed by 3.92%, “shifting from slight losses in the prior session while touching its highest close in a month, buoyed by widespread gains from all sectors. Risk appetite was buoyed by a move from the PBoC to pump the largest amount of cash since 2016 into the banking system as the central bank seeks to spur a recovery in the Chinese economy,” Trading Economics reported. The Nikkei surged by 2.52%, reaching its highest levels in over two months.

Brent crude traded at $81.52 a barrel at 17h30, while gold traded hands at $1 960.26 an ounce at the same time.

PSG Wealth Daily Investment Update, 16 November 2023

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