Market News & Analysis: November 18th, 2024

Global Markets

Canadian Markets

Canada’s main stock index rose on gains in metal prices, including gold.  Gold, in particular, saw a notable rise as investors sought safe-haven assets ahead of this week’s Canadian inflation data. Inflation data remains a key focus for investors, as any signs of rising prices could prompt further tightening of monetary policy by the Bank of Canada. Analysts are closely watching the report for insights into the central bank’s next moves, which could influence the outlook for interest rates and economic growth.

American Markets

In the U.S., major stock indices also posted gains as investors looked ahead to earnings reports from some of the biggest corporate names. The earnings season is in full swing, and while Wall Street is optimistic about corporate profits, there is particular anticipation surrounding the results from Nvidia, a key player in the semiconductor sector. Nvidia has been at the forefront of the AI boom, and its earnings report is expected to give further clues about the future trajectory of the tech sector. Investors are hoping for strong performance to sustain the bullish sentiment in U.S. markets. At the same time, broader concerns about inflation and interest rate hikes continue to linger in the background, influencing investor sentiment.

European Markets 

In Europe, markets were more subdued, with a mixed performance across regional indices. The  decline was largely driven by losses in the real estate and technology sectors.

UK Stocks rose on the mining sector as data showed UK house prices dropped.  Analysts also warned that Trumps tariffs could cost the UK 20 Billion pounds in losses.

Japanese  Markets

In Japan, the Nikkei 225 index dropped following comments from Kazuo Ueda, the governor of the Bank of Japan (BoJ), who failed to provide any clear indication about the timing of future interest rate hikes. The BoJ has maintained ultra-loose monetary policy for years, but with inflation rising, there is growing speculation that the central bank might start tightening in the near future. However, Ueda’s recent remarks left investors uncertain about when this might happen, leading to a pullback in the Nikkei. Market participants were hoping for clearer signals on rate policy, as the BoJ’s stance on interest rates has significant implications for both domestic and global markets. The uncertainty around the BoJ’s next steps added volatility to Japanese equities, with investors also keeping an eye on the global economic outlook and its impact on the yen.

Currencies

The U.S. dollar edged higher against the Japanese yen, continuing a trend of dollar strength that has been fueled by expectations of higher interest rates in the U.S. compared to Japan. With the Federal Reserve’s hawkish stance on inflation, the dollar has been buoyed by rising U.S. Treasury yields, making the dollar more attractive to investors relative to the yen. The Japanese currency remains under pressure as the BoJ keeps its rates low, creating a stark contrast with the tightening policies of central banks elsewhere, such as the Federal Reserve and the European Central Bank.

Oil Prices

Oil prices also saw a modest increase, driven in part by intensifying fighting between Russia and Ukraine over the weekend. The escalation of the conflict in eastern Ukraine raised concerns about further disruptions to global energy supplies, particularly natural gas and oil exports from Russia. The geopolitical risk premium in oil prices remains a key factor supporting market sentiment. However, concerns about fuel demand in China, the world’s largest oil importer, and forecasts of a potential global oil surplus capped the upside for oil prices. China’s economic recovery has been slower than expected, with demand for energy lagging in key sectors such as manufacturing and transportation. Meanwhile, predictions of oversupply in the global oil market in the second half of the year, driven by increased production from major oil producers like the U.S. and Saudi Arabia, also weighed on prices.

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