“US-China Climate Deal…”

A surprise deal between the two biggest greenhouse gas emitters, China and the US has boosted the COP26 UN Climate summit as it entered into its two final days of bargaining to try and stop global warming from becoming a catastrophy.  Alok Sharma, Britain’s conference president called for more effort on “climate finance”, this raises the question of how much the rich countries whose development caused most global warming should pay the poorer ones who will bear most of its consequences.  Developing nations want tougher rules from 2025 onwards, after rich countries failed to meet a 2009 pledge to provide $100 billion a year in climate finance by 2020 to help them curb emissions and cope with the effects of rising temperatures.    China, the world’s biggest producer of greenhouse gases, has gradually accepted more responsibility for its emissions from an economy that has grown beyond measure in the last two decades.  US climate envoy John Kerry and his Chinese counterpart Xie Zhenhua revealed a joint declaration late on Wednesday where China, the biggest producer and user of coal, promised to accelerate its transition from the dirtiest fossil fuel.  The deal between two global powers, which have been divided by many diplomatic disputes on other issues, sent a powerful message to COP26, including the producers of the fossil fuels that are the main cause of manmade global warming. Leaders said it offered a strong signal to other countries and could persuade them to do more to seal agreement at the summit.  Meanwhile, the United States has set a goal to decarbonise its economy by 2050, although President Joe Biden has been struggling to pass crucial legislation to do so through a politically divided Congress. The last two days of negotiations are likely to be intense.  The conference host, Britain, says the goal is to “keep alive” hopes of capping global temperatures at 1.5 degrees Celsius above pre-industrial levels, is still far out of reach under current national pledges to cut emissions.

The UK’s Economy

Britain’s economy grew by 0.6% in September and the estimates for previous months were revised lower, leaving GDP 0.6% smaller than it was in February, 2020.  The office for National Statistics said GDP in July fell by 0.2%, a greater decline than the previously estimated drop of 0.1%, while output in August was shown rising by just 0.2%, weaker than the 0.4% originally reported.  September’s growth was helped by stronger output in the health sector as people started to visit doctors again after visits dropped during the pandemic, leading to a 0.7% rise in the services sector from August. Meanwhile, industrial output fell by 0.4% as gas distribution shrank for a fourth month in a row.  In the third quarter as a whole, GDP grew by 1.3% the weakest three-month growth, since Britain was under lockdown in early 2021. 

UK Shoppers

UK Shoppers’ shopping pace has picked up in October irrespective of the rise in inflation, showed a survey published on Tuesday.  The British Retail Consortium said retail spending increased by 1.3% compared with October, 2020 gaining some momentum after a slow growth to just 0.6% in September when spending shifted from shops to panic buying of fuel caused by a shortage of tanker drivers. 

German Exports

German exports dropped for a second consecutive month in September while imports nearly stagnated, declared the statistics office on Tuesday.  This shows that supply chain disruptions are complicating the recovery of Europe’s largest economy.  Seasonally adjusted exports dropped 0.7% on the month to 112.3 billion euros.  Imports were up 0.1% to 99.2 billion euros, weaker than the predicted 0.6% increase.  Compared to February, 2020, the month before the pandemic hit Germany, exports were still down 0.3%  whereas imports were up 7.8%, the seasonally adjusted data showed. 

US Consumer Prices

US consumer prices increased more than expected in October as the cost of gasoline and food surged, leading to the biggest annual gain since 1990, further indicating that inflation could remain uncomfortably high well into next year amid global supply chains.  The consumer price index climbed 0.9% last month after gaining 0.4% in September, the Labour Department said on Wednesday.  In the 12 months through to October, the CPI accelerated 6.2%.  This was the largest year-on-year advance since November 1990 and followed a 5.4% jump in September.  By excluding the volatile food and energy components, the CPI gained 0.6% after climbing 0.2% in September.  The so-called core CPI jumped 4.6% on a year-on-year basis, the largest increase since August, 1991. 

China’s Factory Inflation

China’s factory gate inflation hit a 26 year high in October as coal prices soared amid a power crunch in the country’s industrial heartland, further squeezing profit margins for producers and heightening stagflation concerns.  The producer price index (PPI) climbed 13.5% from a year earlier, faster than the 10.7% increase in September, the National Bureau of Statistics (NBS) said in a statement.  It matched a pace not seen since July 1995.  Consumer prices also increased faster although at a slower pace than factory gate prices.  The consumer price index (CPI) rose 1.5% in October year on year, compared with the 0.7% rise in September.  Slowing economic growth and soaring factory inflation have fuelled concerns over stagflation which could mean China has to move cautiously on loosening monetary policy.

Japan’s October Service Sector

Japan’s service sector sentiment index in October rose to its highest level in nearly eight years after emergency curbs were eased last month and new COVID-19 cases eased.  Government data showed that the economy watchers’ index advanced 13.4 points to 55.5 in October, the highest level since January, 2014.  It was the second straight month of increase, marking the biggest gain since June, 2020. 

Market Wrap

On Monday Wall Street’s benchmark S&P 500 index and the NASDAQ extended their run of all time, closing high to eight straight sessions, while the blue-chip Dow climbed to its second consecutive record closing high. Strength in commodity-linked sectors helped European stocks to increase to record highs on Monday, although broader gains were stifled by some weak earnings.  The pan-European STOXX 600 closed marginally higher at 483.61 points with the basic resources and energy stocks leading the gains.  Asian shares were mixed and US Treasury yields dropped on Tuesday as markets were boosted by the passing of the long-delayed $1 trillion US infrastructure bill and awaited the release of inflation data from the US.  The MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.2%, Japan’s Nikkei stock index dropped 0.68% while Australian shares were down 0.24% as losses in the financial sector offset the early gains among heavyweight mining stocks.  Meanwhile, European shares were set for a softer open, with the pan-region Euro Stoxx 50 futures down 0.41%, German DAX futures off 0.31% while FTSE futures dropped 0.39%. In the US the Dow Jones Industrial Average dropped by 0.31% to 36,319.98, the NASDAQ 100 dropped 0.71% closing 16,219.94 and the S&P 500 dropped 0.35% at 4,685.25. Meanwhile, the FTSE 100 held steady on Tuesday as banks offset a jump in Primark-owner Associated British Foods (AB Foods) that was fuelled by upbeat earnings outlook and dividend. Weighing on the markets, the banking sector dropped 0.5% with HSBC, Barclays and Lloyds all dropped by about 1%. European stocks closed at a record high on Wednesday following strong earnings from the media and energy sectors, while technology stocks dropped amid fears of increased competition weighed on online food delivery companies.  The CAC 40 increased by 0.09% to 7,049.92 whilst the DAX closed higher by 0.21% to 16,073.95. The FTSE 100 closed higher by 0.91% at 7,340.15. European stocks ended at record high on Thursday after relief over the property developer China Evergrande benefitted the China-focussed mining stocks, while a strong earnings season cheered sentiment.  The pan-European STOXX 600 closed 0.3% higher at a new peak of 485.29 points with the mining sector increasing by 3.7% in its best day in four months.  Thursday saw the CAC 40 climbing by 0.14% to close at 7,059.55, the DAX closed at higher by 0.06% to reach 16,083.11.  The FTSE also followed suit increasing by 0.6% to close at 7,384.18.  In the US, the Dow Jones closed lower by 0.44 at 35,921.23, while the NASDAQ 100 and the S&P 500 closed higher by 0.29% and 0.06% to close at 16,032.47 and 4,649.27.   

Currency Roundup

The Dollar

The dollar dipped on Monday after hitting 15 month highs on Friday following strong US jobs data while investors digested the report.  The dollar index was barely higher on Tuesday as traders were cautious a day ahead of highly anticipated US inflation data.  The dollar fluctuated after Tuesday’s data showed US producer prices increased solidly in October, indicating that high inflation could persist for a while amid tight supply chains related to the pandemic. The dollar rose against major peers on Wednesday after weakening for three days, and traded near a one-month low to the yen, with investors awaiting US inflation data for any signal to when the FED might raise interest rates.  The dollar index which measures the greenback against six rivals, edged back to 94.053 after descending from a more than one year peak at 94.634 that was briefly reached on Friday.   The dollar hit 2021 highs against sterling and the euro on Thursday as data showed US consumer prices grew at their fastest annual pace since 1990 last month. 

Euro

The euro rose by 0.17% on Monday at $1.1588.  Whilst the dollar index was up 0.03% at $94.073 the euro dipped 0.03% to $1.1583.  On Wednesday the euro slipped 0.13% to $1.15805 however held on to most a three-day gain that had brought it close to the month’s high of $1.16165. Thursday saw the euro dropping to $1.1465 as the European Central Bank is seen lagging on policy tightening.  This is the lowest reached since 20 July.    

Sterling

The British pound was up 0.54% at $1.3561 on the rebound from the five week low hit last week after the Bank of England meeting.  The pound was slightly lower against the dollar and the euro on Tuesday not far from five-week lows touched last week. According to the National Institute of Economic and Social Research (NIESR) Britain’s economy risks stagnation and sticky inflation over the coming years due to supply-chain bottlenecks and headwinds from Brexit. At some point the pound fell 0.2% to 85.59 pence against the euro and was down 0.1% against the dollar it was at $1.3425.  Sterling edged lower on Wednesday as Britain and the European Union looked far from finding a post Brexit agreement trade on Northern Ireland.  Sterling was under renewed pressure after the Irish government ministers met to deal with contingency plans in case disagreements between Britain and the EU trigger major trade disruption.  Against the dollar sterling dropped 0.1 to $1.3534 and was not far from a five-week low touched last after the BOE’s policy meeting.  Against the euro the pound flattened at 85.52 pence, after falling on Friday from its lowest level since 1 October.  Thursday saw the sterling marginally down at a fresh 11 month low at $1.3393. 

Bitcoin

Bitcoin on Monday was up 4% at around $65,936.62 not far off from its recent record high, while ether was up 3% at $3,093.48 after hitting a record high of $4,768.07.    Bitcoin and ether made record peaks in Asia trade on Tuesday, boosted by enthusiasm over the cryptocurrency adoption and concerns about inflation driving momentum and flows into the asset class.  Bitcoin rose as high as $68,564 in Asian afternoon trade and ether the second biggest cryptocurrency by market value-earlier hit $4,825.  Both have more than doubled since June and added nearly 70% against the dollar since the beginning of October.  Data from digital asset manager CoinShares showed that inflows into bitcoin products and funds have hit a record of $6.4 billion so far this year and totalled $95 million last week.  Momentum has been gathering since last month’s launch of a futures-based bitcoin exchange-traded fund in the US that raised expectations of flow-driven gains. 

Oil

Oil prices rose on Monday as positive signs for global economic growth supported the outlook for energy demand and the US said it was weighing options to address high prices.  Brent crude was up 0.83% at $83.44 a barrel having lost nearly 2% last week. US oil gained 0.84% to $81.95 after a 3% drop last week.   Oil prices edged up on Tuesday amid the US lifting of travel restrictions and more signs of a global post-pandemic recovery boosted the demand outlook, while supply remained tight.  The rally came about ahead of the US Energy Information Administration’s (EIA) release of oil and gasoline price predictions in its Short Term Energy Outlook (STEO) which US President Joe Biden’s administration has said it would use to determine whether to release oil from the nation’s Strategic Petroleum Reserve (SPR).  Brent futures rose 0.7% to $84.04 a barrel while US West Texas Intermediate crude rose 1.3% to $82.97.  That puts both Brent and WTI on track for their highest closes since 2 November.  The price of Brent has gained over 60% this year and hit a three-year high of $86.70 on 25 October supported by recovering demand and supply restraint by OPEC+. 

Gold

Gold prices were steady on Tuesday, as a weak dollar offset firm US bond yields.  Spot gold was little changed at $1,823.53 per ounce and US gold futures fell 0.1% to $1,825.80. Gold hit its highest since 7 September on Monday as the dollar softened and major central banks indicated inflation would likely fade and immediate interest rate hikes were not required.  Gold has benefited from near-zero interest rates introduced during the COVID-19 pandemic as they reduce the opportunity cost of gold.  Gold prices eased on Wednesday as the dollar firmed, with investors looking forward to key US inflation data that could have a bearing on the Federal Reserve’s next policy move.  Spot gold was down 0.5% at $1,822.80 per ounce after recording its highest since 3 September in the previous session.  Gold prices moved higher on Thursday extending its rally fuelled by the surge in US consumer prices that had spurred some demand for the commodity as an inflation hedge.  Spot gold rose 0.2% at $1852.9 per ounce and US gold futures gained 0.3% to $1854.30.  Gold rose to its highest since 15 June on Wednesday after data showed US consumer prices recorded their biggest annual gain in 31 years last month.  Gold also gained although the dollar hit its highest in a year and the benchmark 10-year US Treasury yields rising.  

Malta:  Residential Property Transactions- October 2021

A press release dated 9^th November, 2021 shows the number of final deeds of sale relating to residential property amounted to 1,134 during October, 2021, an increase of 7.6% when compared to those registered a year earlier.  The value of these deeds amounted to EUR 239 million, a 19.1% higher than the corresponding value recorded in October 2020.  The region sought after by property buyers are the region of Ghawdex, Zabbar, ix-Xghajra, Iz-Zejtun, Birzebbuga, Marsaskala and Marsaxlokk.  Meanwhile the lowest numbers of deeds were noted in the Birgu region, L-Isla, Bormla and Kalkara, H’Attard, Hal Balzan, Iklin and Lija.  With regards to Promise of Sale Agreements relating to residential property were registered equivalent to a 16.1% decrease over the same period last year.  The largest numbers of promise of sale agreements corresponded to residential properties which are situated in the region of Ghawdex, Haz-Zabbar, Ix-Xghajra, iz-Zejtun, Birzebbuga, Marsaskala and Marsaxlokk.  The lowest numbers were noted in respect of properties located in the region of il-Birgu, L-Isla, Bormla and il-Kalkara and the region of L-Imdina, Had-Dingli, Ir-Rabat, L-Imtarfa and L-Imgarr. 

Malta:  Inbound Tourism: September 2021

A press release dated 10^th November, 2021 shows that during the month under review, a total of 149,760 inbound tourists visited Malta for holiday purposes, followed by 6,307 tourists for business purposes.  French and Italian residents comprised 19.6% of total inbound tourists.  Total tourist expenditure surpassed EUR 150.4 million.  The average expenditure per night was estimated at EUR 119.8. 

Meanwhile, inbound tourists for the first nine months of 2021 amounted to 586,234, an increase of 0.4% over the same period in 2020.  Total tourism expenditure was estimated at EUR 566.7 million, an increase of 44.3% when compared to the same period in the previous year.  Total expenditure per capita stood at EUR 967, increasing from EUR 673  in the same period in 2020, mainly as a result of longer lengths of stays.

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