China is experiencing a deflationary trend. Rating agencies downgraded France

On Friday, the Dow Jones (US30) rose 0.97% (for the week +1.36%) and set a new all-time high. The S&P 500 Index (US500) gained 0.61% (for the week +1.35%). The NASDAQ Technology Index (US100) closed positive 0.15% (for the week +1.59%). Despite a sharp drop in Tesla (TSLA) shares due to a failed robot cab event, the NASDAQ Technology Index (US100) was able to close higher. The positive performance was supported by economic data, where unchanged producer inflation indicated progress in the fight against inflation. The Producer Price Index excluding food and energy for September rose 2.8% y/y, which was stronger than expectations of 2.6% y/y.

Uber Technologies (UBER) shares are up more than 6% and topping the S&P 500 leaderboard after Elon Musk gave few details on plans for a self-driving car service that could compete with Uber. Tesla’s (TSLA) stock price fell more than 7% and tops the list of losers in the S&P 500 and Nasdaq 100 after Elon Musk unveiled Cybercab robotaxi prototypes that analysts said were “light on details.” Wells Fargo & Co (WFC) shares are up more than 4% after reporting Q3 EPS of $1.42, better than the consensus estimate of $1.28. JPMorgan Chase (JPM) is up more than 3% and tops the Dow Jones Industrials after reporting Q3 investment banking revenue of $2.35 billion, better than the consensus of $2.13 billion, and raising its full-year net interest income projection.

The Canadian dollar fell to 1.37 per dollar, the weakest level since mid-August, led by a general strengthening of the dollar amid expectations that the Federal Reserve will reduce borrowing costs more slowly than expected. In Canada, investors lowered bets on a 50 bps cut in the Bank of Canada’s key rate this month following the release of a stronger-than-expected employment report. The Canadian economy created 46.7k jobs in September, which was above estimates of 27k, and the unemployment rate unexpectedly fell to 6.5% compared to prognoses of 6.7%. The Bank of Canada is expected to cut interest rates by 25 bps on October 23, as it has done in the last three meetings.

Equity markets in Europe rose steadily on Friday. Germany’s DAX (DE40) rose by 0.85% (for the week +1.17%), France’s CAC 40 (FR40) closed 0.48% higher (for the week +0.08%), Spain’s IBEX 35 (ES35) gained 0.54% (for the week +0.10%), and the UK’s FTSE 100 (UK100) closed 0.19% higher (for the week -0.33%).

Fitch Ratings placed France’s rating in the negative category on October 11, just one day after the government presented its 2025 budget. “This year’s projected fiscal slippage puts France in a worse position, and now expect the fiscal deficit to widen, leading to a sharp rise in public debt to 118.5% of GDP by 2028.” France’s credit rating from Standard & Poor’s is at AA- with a stable outlook. Moody’s credit rating for France was last set at Aa2 with a stable outlook.

WTI crude prices fell to $74.4 a barrel on Monday, accelerating the decline from the previous session, amid concerns about the economic outlook for China, the biggest oil importer. Data over the weekend showed that deflationary pressures in China intensified in September, and a press conference failed to ease concerns over downside risks to growth as the size of the stimulus package aimed at reviving the economy remains uncertain. Further pressuring prices is the projected surplus expected to emerge in early 2025 due to weak global demand and strong supply growth.

Asian markets traded flat last week. Japan’s Nikkei 225 (JP225) rose by 0.93%, China’s FTSE China A50 (CHA50) lost 7.02%, Hong Kong’s Hang Seng (HK50) fell by 3.47%, and Australia’s ASX 200 (AU200) was positive 0.79% for the week.

China’s annual inflation rate in September 2024 was 0.4%, below market projections and August’s 0.6%. It was the 8th month of consumer inflation but the lowest since June, underscoring the need for more policy support from Beijing to address rising deflation risks. Core consumer prices, excluding food and energy costs, rose by 0.1% y/y, the lowest since February 2021, after rising 0.3% in August. Producer prices in China fell by 2.8% y/y, stronger than the 1.8% drop in the previous month and market estimates of a 2.5% decline. This is the 24th consecutive month of producer price deflation and the sharpest contraction since March, driven by continued weak domestic demand despite Beijing’s continued efforts to reverse the trend.