Asian markets are mixed to lower amid subdued trading as investors assess prospects for further, but potentially slower, interest rate hikes among major central banks, as well as rising Covid case numbers in parts of China. Japan reported higher than expected inflation figures for Tokyo (which are released before the national data), led by energy and the weak yen. The Bank of Japan, however, broadly considers the country’s inflationary impulse as temporary. US markets are set to close early later today following yesterday’s Thanksgiving holiday, with Black Friday marking the start of the festive shopping season.
Today’s calendar is sparse in terms of scheduled economic data or events. German third-quarter GDP figures, released earlier, were revised up to show growth of 0.4%q/q after previously already surprisingly on the upside with 0.3%q/q. Latest survey evidence, however, suggests the economy is slowing and may contract in the current quarter. However, yesterday’s improvement in the closely watched IFO survey provided some hope of a relatively early end to the downturn in activity. German GfK consumer confidence, also published earlier this morning, edged up for a second month but remained negative at -40.2.
Attention will likely turn to next week. The main global focus will be on the US labour market report, Eurozone flash CPI inflation and China official PMIs. Fed Chair Powell is scheduled to speak on the economic outlook and ECB President Lagarde will appear before a European Parliament committee.
In the UK, the Bank of England will publish its latest money data, including consumer credit, secured lending and the number of mortgage approvals. Several business surveys will be published, including the CBI’s distributive trades survey, the Bank of England’s ‘Decision Making Panel’ and our own Lloyds Bank Business Barometer.
The pound rose to a three-month high above 1.21 against the US dollar, although it has edged a little lower overnight. The most recent rally was supported by comments from BoE rate-setters confirming that interest rates will likely have to rise further to curb inflation despite the economic downturn. The euro also rallied to above 1.04, reflecting prospects of higher ECB interest rates and broader dollar weakness. Oil prices, meanwhile, steadied but may end lower for a third consecutive week.
