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US shares have undergone mixed performance, and tended to rise with the beginning of Monday’s trading session, attempting to overcome the impact of U. S. and Chinese data that cast negative shadows across the global markets after a decline in the growth of the second largest economy in the world.
Economic Data
The S&P 500 and Nasdaq rose to 4,480 points and 14,992 points, after achieving gains by 0.3% and 0.7%, respectively.
On the other hand, Dow Jones was negatively impacted by the decline in U. S. industrial production and capacity utilization in the United States, which pushed it to downtrend, with losses amounting to 0.2%.
Data on the Chinese GDP witnessed a decline of 4.9% last September, compared to the September 2020 that recorded an increase by 7.9%, exceeding the negative expectations that indicated the possibility of a decline to 5.2%, according to the annual leading index.
The monthly reading of the Chinese GDP decreased by 0.2% compared to the previous reading, which indicated an increase by 1.3%, worse than expected growth of 0.5%.
The reading of Chinese industrial production also fell by 3.1% last September, compared to the reading of the same period last year, which shed light on a progress of about 5.3%, which was also worse than market expectations at 4.5%.
The US industrial production index recorded a sharp deterioration last September, declining by -1.3 percent, compared to the previous reading of -0.1 percent, which was lower than market expectations, at 0.2 percent.
This data is raising inflationary pressures, and lead to tighten monetary conditions expectations. The ongoing energy crisis that hit the Chinese economy forced factories to curb output, coinciding with the Industrial Production for September which came below expectations with a 3.1% (YoY) increase versus 3.8% (YoY) estimated.
Other Developments
U. S. Press Secretary Jen Psaki assured that the White House is continuing to press OPEC member states to address the crude oil supply issue.
U. S. debt limit is back to the news headlines at the latest hours of Monday, as Treasury Secretary Janet Yellen in a letter to Congress said that the Treasury must use extraordinary measures before 3 December 3 to meet all its obligations. She urges a long term debt ceiling increase.
Yellen said the extended debt issuance suspension period would mean that Treasury would continue its suspensions of investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. It will also extend a suspension of the sale of State and Local Government Series (SLGS) securities.
“It is imperative that Congress act to increase or suspend the debt limit in a way that provides longer-term certainty that the government will satisfy all of its obligations,” Yellen wrote in a letter to House Speaker Nancy Pelosi and other congressional leaders.
The U. S. pressure could ease the global concerns about crude oil prices as cold weather is looming in the West.
As leaders prepare for the upcoming EU summit, the European Commission officially starts consultation and discussion on whether and how to reform the Eurozone’s fiscal rules.
Over the past 20 years the Stability and Growth Pact (SGP) has been one of the most contentious pillars of the monetary union. Despite all current shortages in the global economy, there is clearly no shortage of ideas and proposals of how to improve the fiscal rules.
The European Commission will present possible ways forward for the SGP and will start a public consultation process. This process will follow the principles of the ECB’s public consultations as part of the strategy review.
