Weekly house view | Markets jumpy on confusing data
The week in review
The US government shutdown, now the longest in history, is leaving markets to pore over private data to gauge the economy’s health – and last week they got a fright. US-based employers cut more than 150,000 jobs in October, marking the biggest reduction for the month since 2003, a report by Challenger, Gray & Christmas showed. That fed a new bout of volatility in equity markets, which also grew nervous about tech sector valuations. The S&P 500i fell 1.6% (in USD) on the week. Markets were also hit by a University of Michigan survey showing US consumer sentiment slumped to near a 3-1/2-year low in early November. After arguments were heard at the Supreme Court, it looks increasingly likely that President Donald Trump’s tariffs levied under the International Emergency Economic Powers Act (IEEPA) could be struck down. Should this happen, the administration may use other tariff authorities to maintain fiscal revenue, though it would limit the president's ability to impose tariffs arbitrarily. So, the Supreme Court will not decide whether Trump can impose tariffs, but how. Meanwhile, Elon Musk scored a decisive victory in a shareholder vote over his USD 1 trillion pay package at Tesla, winning his second record stock award in as many years. Across the Atlantic, the Bank of England held interest rates steady at 4% in a narrowly split decision (5-4), signaling a dovish stance.
Quote of the week
“Our time has come, New York,” Zohran Mamdani wrote after being elected as the city’s next mayor – a victory that drew reviews of some of his previous comments, including: “Taxati0n isn’t theft. Capitalism is.”
Key data
US-based employers announced more than 1 million job cuts from the start of the year thru end-October, the report by Challenger, Gray & Christmas said. Americans’ outstanding credit card balances increased in the third quarter. The University of Michigan survey confirmed evidence of a K-shaped economy, with higher-income households doing well and those on lower-incomes struggling. US services activity accelerated in October, the Institute for Supply Management (ISM) said, while manufacturing contracted.
In China, CPI rose by 0.2% on the year in October, above expectations.