BMO's Markets Wrap

Last Updated: Thursday, November 25, 2021 7:56 AM | MT Newswires

Bank of Montreal in its morning note of this Thursday -- with US markets shut for the Thanksgiving holiday -- noted overseas markets were mostly stronger following the "generally positive" wave of data on the U.S. economy. Major European indices were up about 0.1%-to-0.2%, while Asian equities were more mixed (Nikkei +0.7%, Hang Seng +0.2%, CSI 300 -0.4%).

Oil was down slightly, below US$78.20 after OPEC said it anticipates a crude surplus in the new year to be exacerbated by the U.S.-led release of reserves. The USD index was little changed as most major currencies were split against the greenback. The SEK was the winner this morning after Sweden's Riksbank indicated it sees a rate hike coming in 2024.

The KRW was down 0.3% after the Bank of Korea raised its policy rate by 25 bps to 1.00% last night. That follows a previous 25-bp hike in August and comes with an upward revision to the Bank's inflation forecast, up two ticks to 2.3% this year and at its target of 2% in 2022. Though he didn't specify a date for the next hike, Governor Lee did not rule out a possible move in 2022 Q1, BMO noted.

And, the ECB will be publishing Minutes from its October meeting at 7:30 this morning (all times ET). BMO noted "that meeting and press conference largely stuck to the script", but said it will be keeping an eye out to see if the Minutes provide any clues for the next meeting in December.

Turning to the data, where final Q3 GDP figures came in for a couple of countries today. Just in, the Mexican economy's contraction was revised down further, to 0.4% (previously 0.2%). The economy is now 4.5% over its year-ago level, down a tick from the previous estimate.

Germany's expansion was revised down a notch to +1.7% in the quarter, although the year-over-year growth remained steady at +2.5%. Plus, there are more signs that the rise in cases is threatening to hurt the recovery to close out the year. GfK's measure of consumer confidence declined more than expected, to -1.6 in December (but November was revised up to +1.0). And, the country now officially knows its new leaders, as Olaf Scholz's centre-left SPD announced its coalition agreement with the Green and Free Democrats parties. The coalition, which calls itself the "traffic light alliance" (based on the parties' colours) named some of its key priorities; including dealing with the pandemic, raising the minimum wage, expanding into renewable energy, and legalizing the sale of cannabis.

Meantime, Japanese department store sales showed signs of life in October, with annual growth rising to 2.9% in October following a -4.3% y/y reading in the previous month. Sales grew across all categories except household goods: clothes, accessories, food and cosmetics and sundries. On the supply side, machine tool orders were confirmed to have risen 81.5% over year-ago levels in October.

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