Financial Markets…Most developing-country stocks retreated, with the benchmark MSCI Emerging Market Index sliding about 0.1%, after the Organization for Economic Cooperation and Development (OECD) lowered its global growth outlook. Some profit-taking pressures following the biggest three-day rally since July also weighed negatively on stocks. Notably, Brazil’s Ibovespa index declined the most since September 30, becoming the worst performer among major EM stock indexes, and Turkey’s benchmark stock gauge fell 1.3% after surging more than 5% over the past four days. In contrast, India’s Sensex index climbed to a two-week high, while South Korea’s kospi index gained 1%.
U.S. Treasuries fell slightly on Tuesday, with the benchmark 10-year yield rising from one-week lows, as investors await more economic data to assess the Fed’s future direction on its stimulus program. After heightened prospect of Fed’s tapering in May and June sent the benchmark 10-year Treasury yields more than 100 basis points higher from their 2013 low, the Federal Reserve is currently weighing when to cut its monthly bond purchases that have swelled the world’s largest central bank’s balance sheet to a record high of $3.91 trillion.
High Income Economies…The OECD announced that the global economy would expand 2.7% this year and 3.6% in 2014, compared with estimates of 3.1% and 4.0% made in May. The downgrade is in view of a slowdown in emerging markets, brinkmanship over the U.S. debt ceiling and concerns over the Federal Reserve's tapering.
Norway’s GDP increased by 0.7% (q/q sa) in Q3 compared to Q2’s increase of 1.2%. Growth of domestic use of goods and services increased from 0.6% in Q2 to 1.6%, which was the main contributor to Q3 growth. Household expenditure rose 0.1% and general government spending gained 0.5%. Meanwhile, investment declined 0.5%, reversing the 4.8% rise seen in Q2. Exports were up 0.1% and imports advanced 2.6%. On a quarterly annualized basis, GDP increased by 2.9% (q/q saar) in Q3, down from Q2’s increase of 4.9%.
Italian industrial orders increased for the second consecutive month in September by 1.6% (m/m sa) compared to August’s 2.2% increase. Export bookings surged 4.8%, while domestic demand shrunk 0.8%. On a three-monthly annualized basis, orders increased by 4.9% (3m/3m saar) in September, compared to August’s increase of 1.8%.
Japan's leading economic index, designed to measure changes in the direction of the economy, strengthened in September 109.2 from 106.8 in August. The coincident economic index, which measures the current economic situation, improved to 108.4 from 107.6 in August.
Developing Economies…East Asia and Pacific: Foreign direct investment flows to China grew moderately in October, rising by 1.2% (y/y) to US$8.42bn, slower than the annual growth of 4.9% recorded in September. In the year to October, FDI in China increased 5.8% to US$97.03bn.
Europe and Central Asia: Turkey’s central bank decided at its November meeting to leave key benchmark interest rates unchanged as domestic demand and exports continue to grow at a moderate pace. The one-week repo rate, the central bank’s main policy rate, was kept at 4.5%; and the overnight lending rate and borrowing rate were left unchanged at 7.75% and 3.5%, respectively. To strengthen the cautious monetary policy stance and reduce the volatility of short-term money market rates as part of its efforts to bring down inflation, the central bank also decided to terminate the one-month repo auctions.
Sub-Saharan Africa: South Africa’s business confidence index increased by 1 percentage point to 43 in the fourth quarter, remaining below the no-change 50 mark. Nevertheless, the index appeared to have stabilized, as this moderate increase followed a 6-index point decline in the third quarter and a 4-index point fall in the second quarter. Contributing to the Q4 reading, retail confidence fell 9 index points to 40, and manufacturing confidence declined 1 index point to 36; wholesaler confidence moved up 8 index points to 51, and building contractors’ confidence gained 4 index points to 47 while the new vehicle dealers’ confidence index rose marginally.