Take Two: Eurozone inflation confirmed at target; Japan exports rise sharply
- 25 November 2024 (3 min read)
What do you need to know?
Eurozone inflation was confirmed at 2% on an annual basis in October - a return to the European Central Bank’s (ECB) target, and up from 1.7% in September. Core inflation - excluding energy, food, alcohol and tobacco - remained unchanged at 2.7%. Meanwhile, ECB president Christine Lagarde warned that Europe must adapt to the changing world and make up the ground it has lost in terms of productivity and technology - otherwise, she said, “we will not be able to generate the wealth we will need to meet our rising spending needs to ensure our security, combat climate change and protect the environment”.
Around the world
Business activity in the Eurozone fell to a 10-month low in November, as overseas demand waned. The flash composite Purchasing Managers’ Index (PMI) fell to 48.1 from 50 in October with sharp reductions in new business seen across both manufacturing and services. Meanwhile Japan’s business activity continued to contract in November, with the flash composite PMI improving slightly to 49.8 from 49.6 in October, but remaining below 50, signifying contraction. Services activity returned to expansion while manufacturing output continued to weaken.
Figure in focus: 3.1%
Japanese exports rose by 3.1% on an annual basis in October, recovering from a 1.7% fall in September - a 43-month low. The government data outpaced market expectations of a 2.2% rise, led by an increase in chipmaking equipment demand from China. The stronger-than-expected growth comes despite mounting uncertainties around potential US trade policies, specifically substantial tariffs, that may disrupt international trade. Meanwhile, imports grew 0.4%, compared to market forecasts for a 0.3% decrease. This took Japan’s trade deficit to ¥461.2bn ($2.98bn) in October.
Words of wisdom
Animal spirits: A term coined by the economist John Maynard Keynes in 1936, ‘animal spirits’ are the instincts that influence human behaviour – and by association, consumer and business confidence as well as market volatility - particularly in times of economic uncertainty. Donald Trump’s recent re-election as US president has rekindled animal spirits for many, with his supporters investing in a future they’re excited for. This surge in confidence saw markets soar in the days following his election, with some indices reaching record highs.
What's coming up?
Germany's closely watched Ifo Business Climate Index is issued on Monday. On Tuesday, the minutes from the latest Federal Reserve meeting are published, offering some insight into its decision to cut interest rates by 25 basis points in November. Meanwhile, the second estimate for third quarter US GDP growth is released on Wednesday, before the Thanksgiving holiday on Thursday. On Friday, Canada’s latest GDP numbers and flash Eurozone inflation data are reported.
Disclaimer
This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
Issued in the UK by AXA Investment Managers UK Limited, which is authorised and regulated by the Financial Conduct Authority in the UK. Registered in England and Wales, No: 01431068. Registered Office: 22 Bishopsgate, London, EC2N 4BQ.
In other jurisdictions, this document is issued by AXA Investment Managers SA’s affiliates in those countries.
© 2024 AXA Investment Managers. All rights reserved