Early Morning Call: China consumer inflation falls as demand softens
China inflation shows its slowest increase in eight months while USD/CNH near its lowest level in three months.
Indices overview
Hong Kong’s Hang Seng led gains for a second straight day. The rest of the APAC region also ended the session higher, following the path set by US indices.
Equally, indices in Europe start the day in positive territory.
In China, the consumer price index (CPI) rose at its slowest pace in eight months in November, climbing 1.6% from a year earlier, which was less than the 2.1% annual rise seen in October and in line with consensus.The producer price index was down 1.3% from a year earlier, unchanged from an annual contraction seen in October.
Producer deflation was led by the steel industry, in which prices were down 18.7%. As we get further indications of an economic slowdown, heading in some areas to a recession, global demand is worsening and oil prices are falling further.
Central Banks
In the current context of economic downturn, the Federal Reserve (Fed), the Bank of England (BoE), and the European Central Bank (ECB) will each decide on interest rates next week and scaling back seems to be the common denominator.
According to a Reuters poll published on Friday, the ECB will take its deposit rate up by 50 basis points (bp) on Thursday 15 December to 2.00%. This is the view of 51 of 60 economists surveyed, while two said the ECB would be more cautious and seven said it would be more aggressive.
The ECB started its fight against inflation in July this year, later than its peers. But since then, it's been raising rates at its fastest pace on record. It has added 200 basis points to its key deposit rate in six months, taking it to 1.50%.
Yesterday, another Reuters poll revealed that 52 of the 54 economists think that the Bank of England will also raise rates by 50 basis points, taking borrowing costs to 3.5%.
And in the US the Fed is also likely to raise by half a percentage point to a target range of 4.25%-4.5%. The last time each of these three central banks met, they all raised their benchmark rates by 75 basis points.
Earnings
Elsewhere on the equity market, Berkeley Group says it expects build cost inflation to start to moderate during 2023 from current elevated levels.
Revenue came in at £1.2 billion, £20 million lower than last year. Berkeley Group this morning posted profit before tax of £284.8 million, marginally lower than the £290.7m reported in the first half (H1) of last year, and says it is on track to deliver pretax profit of approximately £600 million this fiscal year.
And Pendragon top investor Hedin Mobility has dropped its pursuit to take over the British auto retailer. In a statement released this morning, both parties cited challenging market conditions and an uncertain economic outlook.
Hedin currently owns nearly 28% of Pendragon. It had proposed earlier in September to buy Pendragon for 29 pence per share, valuing it at about £406m. The announcement sent the share price up by 21% at the time.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market.
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
