Asian equity markets mostly remained on the back foot following a fifth consecutive daily fall in the US S&P 500 index. Concerns remained about the global economic outlook, while safe-haven demand was also supported by warnings from Russian President Putin on the rising threat of nuclear war. Reports of easing of Covid restrictions in Hong Kong, however, support stocks there.
The UK RICS housing survey was released overnight and showed activity remaining weak in November due to the uncertain economic environment and rising interest rates. The net balance for new buyer enquiries was negative for a seventh straight month although, at -38%, it was an improvement on October’s -53%. RICS nevertheless said that a ’job rich’ recession could limit the housing downturn, with the fall in prices also mitigated by a relative shortage of houses on the market. That said, survey’s prices net balance fell to -25% from -2%, meaning that a net 25% of respondents reported lower prices. Separately, an REC survey reported signs that UK hiring and pay growth moderated in November.
There are no further notable UK or Eurozone data in the rest of the day, although there are a few scheduled ECB speakers including President Lagarde. In the US, the latest weekly jobless claims data are due this afternoon. The figures are not yet pointing to significant job losses despite attempts by the Fed to slow the economy, and we have pencilled in a slight fall in initial claims to 220k. Last Friday’s monthly jobs report was stronger than expected, including an unexpected re-acceleration in wage growth. That outcome has raised concerns that significant more monetary policy tightening may still lie ahead even though the pace of rate rises seems set to slow at next week’s policy update. Former Fed Chair Bernanke gives a Nobel lecture today which may generate some interest.
Early Friday sees the release of China’s producer price and consumer price inflation data. Trade figures released earlier this week revealed bigger than expected contractions in both imports and exports, reflecting the impact of Covid restrictions and weak global demand. The weakness of activity is expected to contribute to weaker inflation, with PPI forecast to fall to -1.5% (from -1.3%) and CPI at 1.6% (down from 2.1%).
UK gilt yields, except at the ultra long end, ended lower yesterday. US Treasury yields, however, are slightly higher during Asian trading. The pound remains above $1.22 and little changed against the euro at €1.16. Brent crude oil edged higher at just above $78 a barrel after recent falls.
