It is a new week in the financial markets, and one that begins with a decent number of fundamental reports and events.
Earlier in the day Japan published some preliminary GDP data for the third quarter of 2021. According to the reports, the GDP grew by -3%, whereas a drop of only -0.8% was expected YoY. QoQ, the drop was -0.8% versus a forecast of -0.2%. In other words, the data was extremely disappointing.
China also brought a lot of excitement to investors during the Asian market session earlier. It published somewhat disappointing reports on the house price index and fixed asset investments.
However, retail sales and industrial production in October in China were both better than anticipated, pleasing investors. Furthermore, the unemployment rate remained unchanged at 4.9%.
In Europe, the balance of trade for September from the whole eurozone was published. It exceeded market expectations, coming in at 7.3 billion euro. The announcement came together with a speech by ECB President Lagarde, and later today we’ll hear the ECB’s Guindos as well.
On the political front, today United States President Joe Biden and his counterpart in China Xi Jinping will meet virtually to discuss the trade disputes between the two largest economies in the world.
Aside from trade, the two leaders might also discuss Taiwan. The US sees Taiwan as an ally in the region, while China sees it as part of its own territories. Talk of ‘reunification’ with Taiwan has increased in recent months, as has the Chinese military presence in Taiwan’s airspace.
After China’s crackdown on Hong Kong, which was a major point of contention between China and the West, Biden and his allies might be eager to avoid the same thing happening in Taiwan as well.
Moreover, last week’s plenum of the Chinese Communist Party decided to make Xi Jinping President for life, a rather undemocratic step, which may also add tension in the relations between the US and China.
As for US domestic affairs, after one stimulus bill getting approved last week, Democrats are gearing up to get the green light on a second, albeit smaller, spending bill this week.
The prospect of increased government spending and investment has been good to US stock indices, with all major names making gains today.
