In recent trading days, investors on both sides of the Atlantic have been confronted with numerous economic data. At the same time, uncertainty ahead of the US presidential elections and the associated government formation dominated. The reporting season has also left its mark. Today, Friday, the focus will finally be on new US labour market data.
DAX Chart
Source: Tradingview
GfK consumer climate rises to highest level since April 2022 - German economy averts technical recession
In Germany, the GfK consumer climate index signaled an improvement on Tuesday thanks to falling inflation. The index rose by 2.7 points to 18.3 points for the second time in a row, which is also the highest level since April 2022.
At 7.443 million units, so-called job openings in the USA (JOLTS) were significantly weaker than expected (7.99 million).
New figures on German gross domestic product (GDP) caused a stir in the middle of the week. Contrary to expectations, GDP increased by 0.2% between July and September. A fall of 0.1% had been expected in advance. This means that the German economy has escaped a technical recession for the time being, which would have required two negative quarters.
GDP for the eurozone also grew more strongly than expected (0.4% vs. 0.2%).
Inflation trend a downer - "PCE deflator" as expected
However, new inflation figures for Germany provided a downer. Preliminary figures show that consumer prices, including energy and food, rose by 2.0% in October (compared to the same month last year), which was higher than expected (1.8%) after 1.6% in September.
At 2.0%, the equivalent figure for the eurozone was also higher than expected (1.9%). Officially, this means that the ECB's long-term target of two percent has been reached.
The "PCE deflator" for personal consumption expenditure (core rate) was as high as expected at 0.3%. This data is also regarded by the Fed as the preferred measure of inflation. The Fed will meet on November 7, two days after the US election, to decide on future monetary policy.
Economists expect a significant slowdown in the job market
Investors are eagerly awaiting the publication of the official US labor market report (Non Farm Payrolls) at 13:30 this Friday afternoon.
Economists expect a significant slowdown in the job market compared to the previous month. According to the latest estimates, the increase in jobs could have amounted to just 113,000 units, less than half the figure for September (254,000).
However, the unemployment rate is expected to remain at 4.1%.
However, contrary to expectations, the ADP data already signaled a significant increase in jobs in the middle of the week. This data is also seen as a foretaste of the "NFPs".
Volkswagen with profit slump - Meta and Microsoft warn of high costs for AI
Volkswagen's figures caused quite a stir this week, as they plummeted in the third quarter due to weak business in China and high costs. From July to September, the operating result fell by 42 percent to 2.9 billion euros compared to the same period last year.
The results of tech giants Amazon and Apple also caused quite a stir. The online mail order company was able to report a jump in profits thanks to an upturn in consumer sentiment. Thanks to the continuing high demand for computing power for artificial intelligence (AI), revenues in the Amazon Web Services (AWS) segment rose by an average of 19%.
Meanwhile, poor business in China weighed on the mood in Apple's ranks. Although the success of the new iPhone generation resulted in the largest sales volume in two years, the outlook for Christmas business is cautious due to the ongoing weakness in China.
Meta Platforms and Microsoft both warned of the rising costs of artificial intelligence (AI). Overall, however, both companies reported strong figures.
