Wednesday, December 4, 2024: Analysis of Key Events and Reports
Wednesday, December 4, 2024, promises to be a significant day for financial markets. Key economic data is scheduled for release, including Purchasing Managers' Indices (PMI) from major economies, the ADP employment report in the U.S., and oil inventory figures. Additionally, speeches from central bank leaders, including Fed Chair Powell, ECB President Lagarde, and the Bank of England Governor, may set the tone for global markets. In this article, we will analyze each event of the day in detail, their impact on the global economy and the Russian market, and provide recommendations for traders.International Events:
- 01:00 MSK: Australia - Services and Composite PMI for November
The services and composite PMI will reflect the state of the Australian economy. A reading above 50 indicates economic activity, which could support the Australian dollar and improve investor expectations related to commodities. - 03:30 MSK: Japan - Services and Composite PMI for November
Japanese PMIs will serve as a key indicator of the country's economic recovery. An increase in indices may strengthen the yen, creating trading opportunities in currency pairs with JPY. - 04:15 MSK: USA - ADP Employment Report
This report serves as a preliminary indicator for Friday's Nonfarm Payrolls data. Strong employment figures will bolster the dollar and create expectations for tighter monetary policy from the Fed. - 04:45 MSK: China - Caixin Services and Composite PMI for November
The indicators will reflect the state of the services sector and the economy as a whole. Strong data will support demand for commodities, including oil and metals, positively impacting Russian exports. - 08:00 MSK: India - Services and Composite PMI for November
India's PMI will show how actively one of the key sectors of the economy is developing. High readings will strengthen the rupee and support investor interest in the Indian market. - 09:00 MSK: Russia - Services and Composite PMI for November
Russian PMIs will indicate the state of the services sector, which plays an important role in the economy. Positive data will support the ruble and strengthen investor confidence. - 11:55 MSK: Germany - Services and Composite PMI for November
As the largest economy in the Eurozone, Germany sets the tone for the region. Strong figures will bolster the euro and support sentiment in European stocks. - 12:00 MSK: Eurozone - Services and Composite PMI for November
Aggregate data for the Eurozone will help assess regional economic dynamics. Growth in PMIs may enhance expectations for interest rate hikes by the ECB. - 12:00 MSK: Speech by Bank of England Governor
Markets will closely monitor comments from the Bank of England Governor, especially given current economic uncertainties. Remarks on monetary policy may cause volatility in the British pound. - 12:30 MSK: UK - Services and Composite PMI for November
The services sector is central to the UK economy. High readings will support the pound and strengthen investor confidence. - 13:00 MSK: Eurozone - Producer Price Index (PPI) for October
The PPI indicates inflationary pressures in the manufacturing sector. An increase in this index may heighten expectations for further rate hikes by the ECB, potentially strengthening the euro. - 16:00 MSK: Brazil - Services and Composite PMI for November
The indicators will provide insight into Brazil's economic condition. Strong data will increase interest in emerging market assets, including Russia. - 16:30 MSK: Speech by ECB President Lagarde
Markets will look for comments on monetary policy and economic prospects in the region. Hawkish rhetoric may strengthen the euro. - 17:30 MSK: Canada - Services and Composite PMI for November
The indices will help assess Canadian economic dynamics. Positive data will bolster the Canadian dollar and support Canadian-related assets. - 17:45 MSK: USA - S&P Services and Composite PMI for November
These data will show the current state of America's largest economic sector. Strong figures will support both the dollar and U.S. stocks. - 18:00 MSK: USA - ISM Manufacturing PMI for November
This indicator is crucial for assessing conditions in the manufacturing sector. A rise in ISM above expectations could increase interest in U.S. assets. - 18:00 MSK: USA - Factory Orders for October
This figure signals prospects for industrial growth. An increase in orders would positively impact GDP expectations. - 18:30 MSK: USA - EIA Oil Inventories
Inventory data will influence global oil prices. A decrease in inventories typically supports price increases, benefiting Russian oil companies. - 21:45 MSK: USA - Speech by Fed Chair Powell
Markets will await comments on monetary policy prospects. Signals about further rate hikes could strengthen the dollar. - 22:00 MSK: USA - Publication of Fed's Beige Book
This report reflects current economic conditions across various U.S. regions. Positive assessments could enhance expectations for tightening monetary policy, leading to a stronger dollar and potential weakening of the ruble.
Key Corporate Events on December 5th
Several significant corporate events are scheduled that may impact stock dynamics in both Russian and American markets:- Russian Companies:
- NKHP (Novorossiysk Grain Products Plant): An extraordinary general meeting (EGM) is set to approve dividends of 17.12 rubles per share for 9 months of 2024.
This dividend payout reflects a stable financial position of the company and may enhance its attractiveness to investors. - VUSH Holding: December 5th is the last day to purchase shares with rights to dividends of 2.11 rubles per share.
Investors interested in receiving these dividends should consider this date when planning transactions. - SmartTechGroup: The board plans to propose increasing authorized capital through additional share placements.
This decision might dilute existing shareholders' stakes but also indicates an intention to raise additional funding for development.
- NKHP (Novorossiysk Grain Products Plant): An extraordinary general meeting (EGM) is set to approve dividends of 17.12 rubles per share for 9 months of 2024.
- American Companies:
- Dollar General Corp (DG): The company is set to release its earnings report before U.S. market open with an expected revenue growth of 4.6%. However, Dollar General has faced financial challenges affecting sales.
Investors should pay attention to net profit figures and future guidance. - Kroger Company (KR): The report is also due before market open with a projected revenue growth of 1%. As one of America’s largest retailers, Kroger’s results may reflect overall trends in consumer sectors.
- Lululemon Athletica (LULU): The report will be released after market close with expected revenue growth of 6.6%. The company is known for its sustainable business model which could support positive financial results.
- GitLab Inc (GTLB): Also releasing a report after market close with an anticipated significant revenue growth of 25.4%, reflecting high demand for its software development solutions.
- Hewlett Packard Enterprise (HPE): Expected revenue growth stands at 12%. The company continues adapting to changing IT service market conditions which may demonstrate effectiveness in its strategy.
- Dollar General Corp (DG): The company is set to release its earnings report before U.S. market open with an expected revenue growth of 4.6%. However, Dollar General has faced financial challenges affecting sales.
- OPEC+ Meeting:
The OPEC+ meeting scheduled for December 5th is expected to be a central event of the day where participants will discuss oil production quotas that directly influence global oil prices.
For Russia as a leading oil producer, OPEC+ decisions are critical; maintaining or increasing current quotas could support oil prices positively impacting government revenues while any disagreements among participants may create volatility in oil markets requiring flexibility from Russian companies' strategic planning. - U.S. Natural Gas Inventory Data:
The publication by EIA regarding natural gas inventories could affect global gas prices; typically a decrease leads to price increases beneficially impacting Russian gas exporters like Gazprom.
However, increased liquefied natural gas (LNG) exports from U.S. to Europe might intensify competition within traditionally important European markets affecting Russia's position amidst rising LNG supply against higher regional gas prices. - Macroeconomic Indicators from Eurozone & Germany:
Data on Germany’s manufacturing orders along with Eurozone retail sales serve as indicators reflecting regional economic activity; positive results signal recovery enhancing demand for Russian export products including energy resources & metals while declines might indicate slowing growth negatively affecting Russian exports. - Corporate Events in Russia:
Decisions regarding dividend payments or capital increases by Russian companies influence their investment attractiveness; e.g., NKHP’s shareholder meeting concerning dividends could raise investor interest boosting stock prices reflecting overall stock market dynamics positively influencing Russian equities amid changing market sentiments based on corporate actions taken during this period.
- Projected Growth: Mikhelson's forecast indicates that global LNG demand will see substantial growth, driven by the shift from coal to natural gas, particularly in countries like China and those in South Asia. This transition is crucial for reducing carbon emissions and improving air quality .
- Comparative Estimates: While Mikhelson's estimate of 920 million tons is optimistic, other reports suggest slightly lower figures. For instance, Shell's annual report projects that global LNG demand will reach between 625 and 685 million tons by 2040, reflecting a more conservative outlook compared to Mikhelson's prediction .
- Regional Dynamics: The demand for LNG is expected to be particularly strong in Asia, with China leading the charge due to its ongoing efforts to decarbonize its energy sector. Countries in Southeast Asia are also anticipated to significantly increase their LNG imports as they seek to replace declining domestic gas production .
- Market Challenges: Despite the anticipated growth in demand, analysts caution that the LNG market may face challenges related to supply constraints and price volatility. The current infrastructure may not be sufficient to meet the projected increases in demand without significant investment in new facilities .
In summary, while there are varying estimates regarding the future of LNG demand, the overarching trend points towards a robust increase as nations strive for cleaner energy solutions, with particular emphasis on the role of LNG in reducing environmental impacts.- Postponed Production Increase: In the upcoming OPEC+ meeting scheduled for December 1, 2024, it is expected that the alliance will decide to extend current production cuts of 2.2 million barrels per day through the end of 2024. This means that the planned increase in production, initially set to begin in January 2025, will likely be delayed until the first quarter.
- Gradual Recovery: OPEC+ intends to gradually lift the cuts after the first quarter of 2025 while continuing to monitor compliance with agreements until the end of November 2025. This approach allows for an assessment of market conditions before increasing production levels.
- Market and Prices: Analysts emphasize that the decision to extend cuts is linked to the need to support oil prices amid a slowing global economy. Any abrupt increase in production could lead to a decline in oil prices.
In summary, OPEC+'s current strategy aims to maintain stability in the oil market, which includes both extending cuts and gradually restoring production levels in the future.- Rate Cut in December: The rate is anticipated to be reduced to 3%, aligning with the views of the majority of economists surveyed by RTRS. This would mark the third rate cut this year, following previous adjustments in October and September.
- Long-term Outlook: Analysts also predict that the rate could drop to 2% by the end of 2025. This projection is based on expectations of inflation slowing down to the ECB's target level of 2%, allowing for continued easing of monetary policy.
- Economic Context: ECB President Christine Lagarde has noted that the Eurozone economy is facing challenges, including sluggish growth and uncertainty in global markets. As such, the central bank will closely monitor economic data before making final decisions.
In summary, the upcoming changes in ECB monetary policy are aimed at supporting the economy and controlling inflation, which are crucial for the stability of financial markets and the well-being of citizens.- Initial Jobless Claims: The number of initial claims for unemployment benefits has risen to 224,000, surpassing the forecast of 215,000 and the previous week's figure of 213,000. This suggests a slight increase in joblessness, which could indicate underlying challenges in the labor market.
- Total Unemployment Beneficiaries: The total number of individuals receiving unemployment benefits stands at 1.871 million, which is lower than the forecast of 1.910 million and the previous count of 1.907 million. This decline may reflect improvements in job placements or changes in eligibility.
- Trade Balance: The trade balance for October shows a deficit of $73.80 billion, which is better than the anticipated deficit of $75.70 billion and significantly improved from the previous month's deficit of $84.40 billion. This improvement in the trade balance could suggest a stabilization in trade dynamics.
These figures highlight ongoing trends in the labor market and trade, providing insights into economic conditions that may influence future policy decisions.