US actions arise, in Europe – restrained growth
Table of Contents
US shares rose 3.6 % and the European stock market index grew by only 1.5 percent. On the US side, a positive impulse was given by the Federal Reserve Bank’s decision to reduce interest rates, but greater growth was limited by several macroeconomic factors, including slightly faster inflation in August.
The US economy is resistant
The US economic data did not show significant problems in September. The new workplaces were developing slower, but still at a positive pace, the supply of labor stabilized, so salary growth slowed down without a faster jump of unemployment.
Sales of new dwellings in the US reached the highest level in August from 2022. and the cost of consumption of households increased by 0.4 % in the real expression of the month, capturing the third consecutive growth. Inflation rose from 2.7 percent. up to 2.9 percent in July. However, this did not prevent the US central bank to reduce the base rate for the first time this year by 25 base points to 4-4.25 %, including two more reductions by the end of the year.
The latest forecasts in the US government show that the US economy grew by 3.8 percent in the second quarter. – Much more than expected. In the first quarter, the economy had contracted 0.6 percent.
Euro zone: Services rescue, inflation accelerates again
The euro area economic environment was uneven in September. Despite the pessimism in the production sector, business expectations continued to improve. The General Procurement Management Index (PMI) has risen to 51.2 points, mainly due to improvement in the service sector, where the PMI has reached the highest level since the end of last year.
German production grew in July for the first time in four months (+2.2 %). Along with quite strong growth in Italy, this compensated for falls in Spain, France and other countries. In August, inflation rose to 2.2 percent in the euro area. – and exceeded the last months of the European Central Bank (ECB).
The main reason for this is the slower decline in energy prices (in September it fell only 0.4 % compared to 2 % in August). Services inflation increased from 3.1 percent. up to 3.2 %, and food, alcohol and tobacco prices rose slower – 3 percent. The ECB left the interest rate unchanged for the second time in a row (2 %).
Market participants continue to believe that the ECB has completed the basic interest reduction cycle – they currently see no reasons why the ECB should continue to cut interest. This is also indicated by the latest Euribor forecasts that show that 3 months. Euribor until 2026. By the end of the 19th century, about 2 percent will reach.
China is pulling em markets upwards
The developing markets in September were the brightest. In China, targeted fiscal and credit promotion factors and improved corporate profit forecasts have led to a jump in stock prices by as much as 9.3 %, thus determining the tonne of the entire developing markets index.
Although India has announced a decrease in production activity compared to previous months, Chinese export growth remained in a positive zone due to stronger markets outside the US. In general, besides China, several major economic economies have taken advantage of more stable economic growth and a slightly more favorable global financial environment, including a weaker US dollar and lower interest rates. This helped to finish 7.2 percent in September. the limit of growth.
