US investors are keeping their fingers crossed that the legendary US consumer has not lost his or her appetite for spending ahead of the crucial pre-Christmas shopping season.
Analysts say the approaching week will be of particular importance because the Thanksgiving holiday week traditionally kicks off an annual shopping fest.
Concerns about the health of the US consumer are mounting, however, because of a nagging housing slump, a related credit crunch and surging energy costs.
Whether the nation's malls bulge with shoppers or struggle to get consumers in the door will have repercussions for Wall Street, which has been buffeted by the housing and credit woes.
The Dow Jones Industrial Average stock barometer gained 1.0 percent in the week to Friday to close at 13.176.79.
The broad market Standard & Poor's 500 rose 0.3 percent to 1,458.74 while the tech-rich NASDAQ increased 0.3 percent to 2,637.24.
ON THE ROPES
With the housing and credit markets on the ropes and rocketing crude oil prices making gasoline more costly at the pump, analysts say consumer spending has become even more vital than usual to US economic well-being.
BIG WEEK
"Next week is the big week for the consumer. The market is going to pay a lot of attention to it," said Marc Pado, an equities analyst at Cantor Fitzgerald.
Pado said the stock markets could rise or fall in coming weeks depending on sales reports from big retailers.
US retail sales, which account for around 70 percent of overall economic growth, showed a lackluster gain of 0.2 percent last month, according to a government report on Wednesday. The reading was the weakest since August when sales rose a tepid 0.1 percent.
Economists said they will also be awaiting the release of a consumer sentiment survey next week, published by the University of Michigan, which will reveal clues on whether Americans are maintaining or cutting back their spending.
"The decline in [consumer] sentiment, if sustained, suggests a weak holiday shopping season and is consistent with our view of weaker consumption in the near term," economists at Lehman Brothers said in a briefing note.
The release of minutes from the Federal Reserve's last interest rate policy meeting on Oct. 30 and Oct. 31, and reports on leading economic indicators and the housing market are also on Wall Street's radar for the week ahead.
The central bank cut borrowing costs for the second-straight month last month, by a quarter of a percentage point to 4.50 percent. Economists generally expect the Fed to hold its fed funds short-term interest rate steady at a policy meeting scheduled for Dec. 11.
ECONOMIC RELEASES
The leading indicators, Fed minutes and consumer sentiment survey will be released tomorrow, Tuesday and Wednesday respectively in an otherwise light week for major economic releases.
Bond prices strengthened in the past week as the yield on the 10-year Treasury bond tumbled to 4.150 percent from 4.225 percent a week earlier, and that on the 30-year Treasury fell to 4.523 percent from 4.602 percent. Bond prices and yields move in opposite directions.
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in artificial-intelligence (AI) chips, yesterday said that small-volume production of 3-nanometer (nm) chips for a key customer is on track to start by the end of this year, dismissing speculation about delays in producing advanced chips. As Alchip is transitioning from 7-nanometer and 5-nanometer process technology to 3 nanometers, investors and shareholders have been closely monitoring whether the company is navigating through such transition smoothly. “We are proceeding well in [building] this generation [of chips]. It appears to me that no revision will be required. We have achieved success in designing
PROJECTION: KGI Financial said that based on its foreign exchange exposure, a NT$0.1 increase in the New Taiwan dollar would negatively impact it by about NT$1.7 billion KGI Financial Holding Co (凱基金控) yesterday said its life insurance arm has increased hedging and adopted other moves to curb the impact of the local currency’s appreciation on its profitability. “It is difficult to accurately depict the hedging costs, which might vary from 7 percent to 40 percent in a single day,” KGI Life Insurance Co (凱基人壽) told an investors’ conference in Taipei. KGI Life, which underpinned 66 percent of the group’s total net income last year, has elevated hedging to 55 to 60 percent, while using a basket of currencies to manage currency volatility, the insurer said. As different
Taiwanese insurers are facing difficult questions about the damage of recent swings in the New Taiwan dollar. Regulators might have a partial solution: letting firms change how they calculate the value of foreign currency assets. The Financial Supervisory Commission (FSC) is considering allowing insurers to use six-month average exchange rates when they calculate risk-based capital in their semiannual reports, a shift from the current system where insurers use exchange rates on the final day of reporting. The change could ease pressure on the US$1.2 trillion insurance sector, whose huge exposure to foreign assets came into the spotlight earlier this month after a
RSS