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Last Week
- China’s top leaders plan to ease monetary policy and expand fiscal spending in 2025 as Beijing braces for heightened economic challenges, including potential trade tensions. The Politburo, led by President Xi Jinping, announced a shift toward a “moderately loose” monetary policy—the first such adjustment since 2011. Fiscal policy will also adopt a more aggressive stance, evolving from “proactive” to “more proactive,” according to state media. At the December meeting, officials pledged to stabilise property and stock markets and deploy “extraordinary counter-cyclical policy adjustments,” signalling a readiness to use unconventional measures to support the economy. These steps highlight China’s determination to bolster confidence amid external risks, including the prospect of U.S. tariffs. The offshore yuan rose 0.1%, reflecting optimism about the planned stimulus, while 10-year government bond yields dropped slightly. Regional currencies also strengthened. Analysts expect robust fiscal expansion, significant interest rate cuts, and asset purchases to underpin growth. The Politburo’s policy signals set the stage for the Central Economic Work Conference, where economic priorities for 2025, including growth targets, will be finalized. With GDP growth likely targeted at around 5%, Beijing aims to counter challenges stemming from weak global demand and lingering post-pandemic uncertainties.
- Pressure is mounting on French President Emmanuel Macron to quickly appoint a new prime minister as the government scrambles to pass a crucial spending bill before the year’s end. Francois Bayrou, a prominent centrist and potential candidate for the role, stressed that “we can’t continue like this.” Yael Braun-Pivet, speaker of the National Assembly, also urged Macron on Sunday to make an appointment “within the next few hours.” The urgency follows last week’s dramatic collapse of the government after Marine Le Pen’s National Rally joined a left-wing coalition to oust outgoing Prime Minister Michel Barnier. Macron pledged to name a replacement “in the coming days” to guide the passage of a stopgap budget necessary to avoid fiscal paralysis. Macron has been consulting with political leaders, including allies, centre-right figures, and Socialist lawmakers, while facing calls to engage with the far-right National Rally. Their leader, Jordan Bardella, has demanded a meeting to discuss key policy “red lines.” Le Pen has suggested a slower approach to narrowing the budget deficit under the next administration. The political uncertainty comes at a pivotal time for France, as it navigates EU trade negotiations and geopolitical challenges, including the ongoing war in Ukraine.
- UK firms sharply reduced job postings in November, marking the steepest decline in over four years, as the impact of tax hikes in Labour’s first budget began to bite. According to the Recruitment & Employment Confederation (REC) and KPMG, vacancies fell at the fastest rate since August 2020, particularly in permanent positions. This slowdown, combined with an increase in available workers, kept wage growth at its weakest since 2021. The drop in hiring activity follows the £40 billion in tax increases announced by Chancellor Rachel Reeves on October 30, including a 1.2 percentage-point rise in payroll levies from April and a 6.7% hike in the minimum wage. Neil Carberry, REC’s Chief Executive, noted that firms were reassessing hiring plans after the challenging budget. KPMG’s Jon Holt highlighted that rising employee costs are prompting businesses to slow recruitment and turn to temporary staff during the uncertainty. The Bank of England is closely monitoring these trends to assess potential adjustments to its gradual interest rate cuts.
Market Pulse
Coming Up
- US CPI Data, Wednesday 11th December 2024 at 1:30am
- EUR ECB Interest Rate Decision, Thursday 12th December 2024 at 1:15pm
- UK GDP and Manufacturing Data, Friday 7th December 2024 at 7:00am
Notice:
For professional advisers only, Copia does not provide financial advice, and the contents of this document should not be taken as such. The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated, but is not an indicator of potential maximum loss for other periods or in the future.Open document settingsOpen publish panel
