“European Gas Prices…”

European gas prices surged again on Wednesday after a delay in the approval process for a major new pipeline from Russia, which according to German government sources might not be commissioned now, until March next year. Germany’s energy regulator suspended the process to get the Nord Stream 2 pipeline up and running on Tuesday, lowering hopes that it will provide any significant gas supplies to Europe in the coming months.  The delays in the approval process for Nord Stream 2 have raised fears that Europe, which gets a third of its gas from Russia, could face power outages this winter due to low supplies.  High energy prices are already driving up inflation rates.  Meanwhile European governments are addressing the issue of rising prices to soften the impact on consumers and businesses with emergency measures such as price caps and subsidies.  The higher energy prices in Europe and around the world are already feeding in higher inflation rates, which could lead policymakers to raise interest rates sooner than expected. 

Swiss getting prepared to issue green government Bonds

In its commitment towards sustainability, Switzerland is preparing to issue green government bonds, the government said on Wednesday.  The federal treasury in cooperation with the environment ministry will prepare a framework for issuing green bonds and submit it to the cabinet by the end of 2022 for a decision, said the council in a statement.

US Weekly Jobless Claims

The number of Americans filing new claims for unemployment benefits dropped close to pre-pandemic levels last week as the labour market recovery continues despite a shortage of workers that remains a hindrance to faster growth in employment. The labour Department on Thursday reported the weekly unemployment claims, showing the jobless benefit rolls declining to a 20-month low in early November.  The economy is regaining momentum after a quiet summer due to a resurgence in the number of COVID 19 infections that negatively impacted the nation.  Initial claims for state unemployment benefits dropped 1,000 to a seasonally adjusted 268,000 for the week ended 13 November, said the Labour Department on Thursday.  That was the lowest level since the beginning of the coronavirus pandemic in the US.  Meanwhile, the economy created 531,000 jobs in October.  Employment growth has averaged 582,000 jobs per month this year and the labour force is down 3 million from its pre-pandemic level.

US Retail Sales

US retail sales surged by 1.7% last month, said the Commerce Department on Tuesday.  Data for September was revised higher to show retail sales increasing 0.8% instead of 0.7% as previously reported.  Sales have now risen for three straight months.  Unit motor vehicle sales increased in October for the first time in six months. The tight supply of automobiles amid the global semiconductor shortage has driven up motor vehicle prices, contributing to the rise in retail sales last month.  Retail sales were also boosted by higher gasoline prices.  Consumer prices soared 0.9% in October.  Excluding automobiles, gasoline, building materials and food services, retail sales shot up 1.6% last month after increasing 0.5% in September.  These so called retail sales correspond most closely with the consumer spending component of gross domestic product.  Retail sales are mainly made up of goods, with services, including healthcare, education and hotel accommodation, making up the remaining portion of consumer spending. 

Biden Signs $1 trillion infrastructure bill into law

President Joe Biden signed into law a $1 trillion infrastructure bill at a White House ceremony on Monday that drew Democrats and Republicans, who pushed the legislation, through a deeply divided US Congress.  The aim of the measure is designed to create jobs across the country by distributing billions of dollars to state and local governments to fix bridges and roads and by expanding broadband internet access to millions of Americans.  The bill signing ceremony, was a rare moment when members of both parties were standing together and celebrated a bipartisan achievement.  Biden signed an executive order before the ceremony directing that materials made in the US be given priority in infrastructure projects, said the White House. 

Market Wrap

Wall Street indexes closed out Monday’s session nearly unchanged as rising Treasury yields dented the appetite for technology stocks, while Boeing shares advanced on signs of demand for its freighter aircraft.  The technology sector was down 0.11% the biggest drags on the day as US Treasury yields moved higher, with the yield on the benchmark 10-year US Treasury note touching its highest level since 27 October.  Higher Treasury yields tend to weigh on high-growth areas such as tech.   Bank stocks benefit from the rising yields.  Data on Monday showed manufacturing activity in New York climbed to 30.9 in November, well above the prior 19.8 reading.   Boeing Co rose by 5.49%, boosting the Dow Jones Industrials as the stock closed at a three-month high after Emirates airlines announced an order for two 777 Freighters and as Saudi Arabian Airlines is in talks with the planemaker for a wide-body jet order.  European stocks hit another record peak on Monday after comments from European Central Bank Chief Christine Lagarde helped beat back the bets of tighter monetary policy, while a fall in miners kept gains at bay. Asian shares were mostly higher on Tuesday as the relief in China’s property sector supported sentiment while investors also kept an eye on a key meeting between US President Joe Biden and Chinese leader Xi Jinping.  European stocks rose for a sixth consecutive session to hover near record highs on Wednesday, as some positive earnings reports offset the worries that soaring natural gas prices were feeding into inflationary pressures.  In early trading the pan-European STOXX 600 climbed 0.1% after better-than-expected US retail data lifted Wall Street equities on Tuesday.  Tech stocks were led by the gains in chipmakers and British software firm Sage Group following its results.  Meanwhile, travel and leisure stocks dropped by 1% dragged down by Swedish online gaming company Evolution. Thursday saw the CAC 40 and the DAX dropping by 0.21% and 0.18% closing at 7,141.98 and 16,221.73 respectively. Meanwhile the UK’s FTSE 100 fell on Thursday as oil and mining majors took a plunge from weaker commodity prices. The index closed lower by 0.48% to close at 7,255.96.      

UK Inflation

British inflation climbed to a 10-year high last month amid the sharp rise in household energy bills according to data on Wednesday that raised expectations that the Bank of England will raise interest rates next month.  Consumer prices rose by 4.2% in annual terms in October, rising from a 3.1% increase in September. The pound climbed to a one-week high versus the US Dollar and a 21 month high against the euro after the data. Finance minister Rishi Sunak said that rising inflation was not just a British problem and the government was taking action to offset the impact on spending power.  The Office for National Statistics said household energy bills were the largest driver of inflation following the lifting of a regulatory cap on bills last month, with gas prices paid by consumers up 28.1% in the year to October.

UK Jobs

British employers hired more people in October after the government’s job-protecting furlough scheme ended, potentially easing the concerns at the Bank of England about the risks of raising interest rates. The unemployment rate dropped by more than expected to 4.3% for the three months to September from 4.5% before, its lowest since the three months to July 2020.  The Bank of England is considering when to raise interest rates and is watching closely to see how the labour market has held up since the furlough scheme expires, as an estimated 1.1 million people were still on it in its final days.

Gold

Gold prices gained on Tuesday, on worries over more persistent inflation that is keeping the gold’s appeal as a hedge against higher prices intact, despite a stronger US Dollar and higher bond yields.  Spot gold rose 0.2% to $1,865.81 per ounce.  US gold futures were up 0.1% to $1,868.40. Gold climbed on Wednesday as fears over inflation supported prices, although a strong US dollar capped gains.  Spot gold rose 0.3% to $1,855.19 per ounce while gold futures climbed by 0.1% to $1,856.00.    Gold prices eased on Thursday amid the uncertainty over the pace at which central banks could raise interest rates to control inflation that had an impact on the bullion’s appeal and offset a dip in the dollar.  Spot gold dropped 0.1% to $1,864.40 per ounce while US gold futures dropped 0.2% to $1,866.  Gold is often viewed as a hedge against inflation however higher interest rates raise the opportunity cost of holding it.  

Oil Prices

Oil prices rose on Tuesday supported by the prospect of tight inventories across the globe, however, the gains were capped by forecasts of an increase in global production in the coming months and concerns over rising coronavirus cases in Europe.  Brent crude was 0.6% higher at $82.57 a barrel and US West Texas Intermediate crude climbed 0.5% to $81.30 a barrel. The International Energy Agency (IEA) said the oil market rally may ease off as high prices could provide a strong incentive to boost production, particularly in the United States.  The IEA said it expected average Brent prices to be around $71.50 per barrel in 2021 and $79.40 in 2022. Oil prices slumped on Wednesday driving major benchmarks to their lowest settlements levels since early October, after OPEC and the International Energy Agency warned of impending oversupply.  Furthermore, the rising COVID-19 cases in Europe increased the possibility of downside risks to demand recovery.  Prices dropped further in post-close trading after Reuters reported that the US was asking other major global oil consumers like China and Japan to consider a coordinated release of oil reserves to bring prices down.  Brent crude futures dropped 1.7% at $81.05 a barrel while US West Texas Intermediate crude futures settled at $78.36 down by 3%.  The declines led Brent to its lowest close since 1 October and US crude to its lowest settlement since 7 October.  The global oil market was focusing on the swift rise in demand against a slow increase in supply from OPEC and its allies and the US shale players to overspend on drilling. 

Currency Roundup

EUR

The euro scraped off a 16-month low on Tuesday and rose almost 0.2% to $1.1383. Wednesday saw the euro dipping abruptly to $1.1263 for the first time since July 2020 before trading 0.2% lower at $1.1308.   On Thursday the euro rebounded away from the 16- month lows versus the dollar as traders assessed whether the dollar’s recent surge had gone too far.   

 Dollar

The dollar was firm on Tuesday as traders awaited retail sales data. Talks between the US President Joe Biden and his Chinese counterpart Xi Jinping during the Asia session are also likely to set the tone in financial markets.  The US Dollar held above 4 ½ year highs versus the yen and was set to make fresh gains towards the $1.12 levels against the euro on Wednesday after robust US data and hawkish comments from FED policymakers raised expectations of a rate hike as mid-2022.  The dollar index which measures the currency against six rivals rose 0.1% to 96.053 after earlier touching 96.266 for the first time since July last year.  The dollar traded below a 16-month peak in Asian trade on Thursday, after having falling against the pound and the yen overnight as traders were assessing the recent surge in the US currency was starting to stall.  

Sterling

Sterling was steady at 84.71 pence per euro and a fraction stronger on the dollar at $1.3433 on Monday.   Sterling rose on Tuesday as data showed that British employers hired more people in October after the government’s furlough scheme ended, easing some of the Bank of England concerns about the risks of raising interest rates.  Against the dollar, sterling rose 0.4% to $1.3467 after touching a 11 month low on Friday.  It also rose 0.4% against the euro to 84.38 pence.  On Wednesday sterling climbed to a one-week high versus the US dollar and a 21 month high against the euro after data showed British inflation reached a 10 year high in October, boosting expectations of a rate hike as early as next month.   Against the US Dollar, sterling edged 0.3% high to $1.3480, its highest level since 10 November.  It reached a higher milestone against the struggling euro rising to a February 2020 high of 83.90 pence.  The pound increased to a one-week high against the US Dollar and a 21-month peak against the euro on Wednesday after data showed inflation in the UK surged to a 10-year high last month.  Thursday saw the pound holding at a one-week high against the dollar on expectations that the UK central bank will act sooner rather than later to increase policy rates so as to combat inflation, which could in turn boost the sterling.   

Bitcoin

Bitcoin dropped more than 4% on Tuesday as it extended a decline through a week that also included an upgrade to its blockchain.  Bitcoin dropped to $60,350 at its lowest for the day, taking losses from a record high of $69,000 reached on 10 November to more than 11%.  Ether the second biggest cryptocurrency by market value was down 4.5% at $4,355.40. In cryptocurrencies, bitcoin traded just off $60,000 on Wednesday after dipping below that level on Tuesday for the first time this month. 

Malta:  Outbound Tourism – 3rd Quarter, 2021

A press release dated 15 November, 2021 shows that during the quarter under review, a total of 61,936 outbound tourist trips were undertaken for holiday purposes, followed by 41,986 trips for visiting friends and relatives.  Italy remained the most popular destination, with a share of 41.9% of total tourist trips.  Total expenditure by outbound tourists between July and September reached EUR 98.5 million, equivalent to an average of EUR 807 per person. Meanwhile the total outbound trips between January and September, 2021 stood at 179,847, an increase of 7.4% over 2020.  Total nights spend by outbound tourists went up by 53% reaching nearly 1.9 million nights.  Furthermore, total estimated outlay by outbound tourists stood at EUR 151.2 million, 29.7% higher than that recorded for the same period in 2020.

Malta: Harmonised Index of Consumer Prices (HICP)

A press release dated 17th November, 2021 in October, 2021 the annual rate of inflation as measured by HICP was 1.4% up from 0.7% in September, 2021.  The largest upward impact on annual inflation was measured in the food and non-alcoholic beverages index (0.53%) while the largest downward impact was recorded in the restaurants and hotels index (-0.38%).  The HICP measures monthly price changes in the cost of purchasing a representative basket of consumer goods and services.  The HICP is calculated according to the rules specified in a series of European Union regulations that were developed by Eurostat in conjunction with the EU Member States.  The HICP is sued to compare inflation rates across the EU.

Antonella Mercieca

Client Relationship Manager

Source:

Reuters, https://nso.gov.mt/

Date:

November 19th, 2021


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