Global Markets End Week on a Soft Note
The global markets ended the week on a softer tone, with equities drifting lower due to concerns over stretched tech valuations. This occurred despite mixed US economic data, which showed manufacturing remaining in contraction while services surprised to the upside. Investors stayed cautious ahead of the December Fed meeting.
US Economic Data
Manufacturing Sector
US manufacturing weakened again in October, marking the eighth consecutive month of contraction. The ISM Manufacturing Index slipped by 0.4 points to 48.7, remaining below the 50 level that signals expansion. Output dropped sharply, and employment continued to decline for a ninth straight month as companies cut staff. The prices paid index fell to 58.0, its lowest since early tariff periods, indicating softer input-cost inflation.
Services PMI Surpasses Forecasts
In contrast, the US ISM Services PMI increased to 52.4 in October from 50.0, beating expectations and marking the strongest services sector expansion since February. Activity and new orders strengthened, signaling improving demand. However, employment remained in contraction territory due to uncertainty over the sustainability of growth.
Labor Market
US private sector hiring picked up in October, with 42,000 jobs added after two months of declines, according to ADP. Most of the job gains came from trade, transportation, and utilities, as well as education and health. Despite the positive job report, markets still overwhelmingly favor a rate cut for the December meeting.
Central Banks’ Decisions
Bank of England Policy Rate
The Bank of England kept interest rates at 4 percent in a narrow decision that pointed toward a possible cut in December. The bank said September inflation of 3.8 percent was likely the peak, and meeting minutes showed that inflation risks had eased and become more balanced.
Swiss Inflation Falls
Swiss inflation slowed significantly in October, falling to 0.1 percent YoY from 0.2 percent in September and far below expectations. Core inflation also eased to 0.5 percent from 0.7 percent, reflecting widespread softness in price pressures.
Reserve Bank of Australia
The Reserve Bank of Australia kept the cash rate at 3.6 percent and warned that inflation pressures are reemerging. The board unanimously agreed that rates should remain unchanged and did not consider a cut, with Governor Michele Bullock cautioning that easing too soon could prevent inflation from continuing to fall.
Kuwaiti Market
The USD/KWD closed last week at 0.30605. The Kuwaiti dinar’s performance is closely tied to global economic trends and the decisions of central banks around the world.
Conclusion
In conclusion, the global markets ended the week on a softer note due to concerns over stretched tech valuations and mixed US economic data. The manufacturing sector remained in contraction, while the services sector surprised to the upside. Central banks’ decisions, including the Bank of England and the Reserve Bank of Australia, pointed toward possible rate cuts in the future. The Kuwaiti market also reflected these global trends, with the USD/KWD closing at 0.30605. As the global economy continues to evolve, investors will be closely watching the decisions of central banks and the performance of various sectors to make informed investment decisions.
