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The Market Last Week

Global equities ended mostly weaker last week, weighed down by a sharp decline in commodity-related stocks. UK markets ended the week in negative territory, amid losses in commodity stocks. On the macro front, UK’s consumer price index (CPI) advanced less than market expectations on an annual basis in October. Furthermore, the ILO unemployment rate recorded a steady reading in the July-September 2017 period. Additionally, UK’s claimant count rate recorded an unchanged reading in October. European markets ended the week in the red, led by losses in energy sector stocks. On the macro front, Eurozone’s CPI grew at a slower pace, at par with market forecast, on a yearly basis in October. Further, industrial production dropped in line with market expectations on a monthly basis in September. US markets ended the week mostly on a negative footing. In economic news, US CPI climbed in line with market expectations on a yearly basis in October. Also, US advance retail sales surprised with a rise on a monthly basis in the same month. Additionally, industrial production advanced at a faster-than-expected pace to its highest level since April on a monthly basis in October. Moreover, the nation’s manufacturing production recorded a more-than-expected rise on a monthly basis in the same month. Adding to the positive sentiment, housing starts bounced back to hit its highest level since October 2016 on a monthly basis in October. Moreover, the building permits rebounded more-than-expected in October, notching its highest level since September 2007. In contrast, initial jobless claims surprisingly increased for the week ended 11 November 2017. Asian markets closed mostly lower last week. Data indicated that China’s retail sales rose less than market forecasts on an annual basis and industrial production grew less-than-expected on a yearly basis in October. Meanwhile, Japan’s economy advanced at a slower pace on a quarterly basis in 3Q17.

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Currency Update

The EUR ended stronger against the USD, after Eurozone’s gross domestic product (GDP) rose at par with market forecast on a quarterly basis in the third quarter of 2017. Additionally, ZEW economic sentiment index advanced higher than market anticipations in November. Furthermore, trade surplus widened more-than-expected in September. Meanwhile, the German economy grew at a stronger-than-expected pace on a quarterly basis in 3Q17. The British Pound ended stronger against the greenback, after UK’s average earnings including bonus rose more-than-expected on an annual basis in the July-September 2017 period. Moreover, the nation’s monthly retail sales painted a positive picture for October. The US Dollar ended weaker against its major counterparts, amid rising concerns over US tax reforms and following a report that Special Counsel Robert Mueller had subpoenaed US President, Donald Trump’s election campaign for documents related to Russian interference in the 2016 US Presidential election.

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Carney hints at possibility of two more rate hikes in coming years…

The Bank of England Governor, Mark Carney, reassured that the central bank will probably need to hike interest rates a couple more times over the next few years, provided the British economy grows as expected. Furthermore, Carney stated that the central bank will support the UK economy in all possible ways during the Brexit transition period irrespective of whether there is no deal or a comprehensive deal with the European Union.

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The Week Ahead

Going ahead this week, investors will keep a close watch on the FOMC meeting minutes and UK Autumn budget along with the European Central Bank (ECB) account of the monetary policy meeting and the ECB President, Mario Draghi’s speech for further direction On the data front, UK’s GDP data, US flash durable goods orders and manufacturing PMI data will be on investors’ radar.

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