Economy

Investors pumped a substantial $12.19 billion into global equity funds, a jump of 32% compared with about $9.24 billion worth of net acquisitions in the week before, LSEG Lipper data showed. It marked the ninth consecutive weekly inflow.On Friday, global shares were on track for their best month since May, driven by optimism about strong U.S. growth and the artificial intelligence investment boom, despite concerns over political turmoil and economic slowdown in Europe.Last week, U.S. President-elect Donald Trump’s appointment of fiscal hawk Scott Bessent as U.S. Treasury Secretary raised market expectations of controlled debt levels in his second term, leading to a drop in Treasury yields.Investors picked a significant $12.78 billion worth of U.S. equity funds, extending net purchases into a fourth successive week. However, they withdrew $1.17 billion and $267 million out of Asian and European funds, respectively.The financial sector witnessed robust demand as it drew $2.65 billion in net purchases, the fifth weekly inflow in a row. Investors also snapped up consumer discretionary, tech and industrials sector funds totaling a hefty $1.01 billion, $807 million and $778 million, respectively.Global bond funds witnessed inflows for the 49th successive week. Investors poured $8.82 billion into these funds.Corporate bond funds received a net $2.16 billion, the biggest weekly inflow in four weeks. Government bond funds and loan participation funds also witnessed notable purchases, totaling a net $1.9 billion and $1.34 billion, respectively.At the same time, investors ditched $12.87 billion worth of money market funds in a second straight week of net sales.The gold and precious metals funds gained a net $538 million, marking a 14th weekly inflow in 16 weeks.Data covering 29,635 emerging market funds indicated that equity funds were out of favour for a fifth consecutive week with about $4.3 billion in net sales. Investors also divested bond funds to the tune of 2.58 billion, logging a sixth weekly net sales. More

India’s economy expanded by 5.4% in its second fiscal quarter ending September.
Economists polled by Reuters had forecast growth of 6.5% for the period, while the Reserve Bank of India expected an expansion of 7%.
Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis, said India’s economy will slow but not “collapse” in 2025.

Construction workers in Mumbai, India, on June 5, 2024. 
Bloomberg | Bloomberg | Getty Images

India’s economy expanded by just 5.4% in its second fiscal quarter ending September, well below estimates by economists and close to a two-year low.
The print follows 6.7% growth over the previous quarter and is the lowest reading since the last quarter of 2022. Economists polled by Reuters had forecast growth of 6.5% for the period, while the Reserve Bank of India expected an expansion of 7%.

The country’s statistics agency noted sluggish growth in manufacturing and the mining sector.
The yield on the country’s 10-year sovereign bond quickly sank to 6.74% after the release, from around 6.8%.
The weak GDP reading could potentially affect the country’s interest rate trajectory, with the RBI’s Monetary Policy Committee scheduled to meet between Dec. 6-8. Markets watchers had been expecting an eleventh consecutive pause by the RBI, with the repo rate currently at 6.5%.
Harry Chambers, an assistant economist at Capital Economics, said the Friday reading showed that weakness was “broad based.” His firm expects economic activity “to struggle over the coming quarters.”
“That bolsters the case for policy loosening, but the recent jump in inflation means the RBI won’t feel comfortable cutting interest rates for a few more months yet,” he said in research note.

Speaking to CNBC “Squawk Box Asia” before the GDP release, Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis, forecast that India’s economy will slow but not “collapse” in 2025.
She said that Natixis has a 2025 growth forecast of 6.4% for India — without clarifying whether this refers to the fiscal or calendar year — but added that the print could also come in as low as 6%, which she qualified as “not a bit problem, but it’s not welcome.”
Separately, the RBI projected that GDP growth for the 2024 fiscal year ending in March 2025 will reach a higher 7.2%.
Asked how India’s economy will fare under President-elect Donald Trump’s second presidency, Herrero said the country is “not really at the center of the reshuffling of the value chain that China has been conducting.”
“If I were the Trump administration, I would start [looking at tariffs for] Vietnam. That’s a much more obvious case,” she noted.
She said that China could make products in India for Indian consumption instead of exporting products globally — and as such, New Delhi could avoid getting hit by tariffs. More

Annual euro zone inflation rose to 2.3% in November, statistics agency Eurostat said Friday.
While it takes price rises back above the European Central Bank’s 2% target, the increase was expected and primarily down to effects from the energy market.

The stalls at the 590th Dresden Striezelmarkt are brightly lit at the opening.
Sebastian Kahnert | Picture Alliance | Getty Images

Annual euro zone inflation rose to 2.3% in November, statistics agency Eurostat said Friday, climbing back above the European Central Bank’s 2% target.
Economists polled by Reuters had expected the 2.3% annual rate for the month, up from 2% in October.

Price rises in the bloc have ticked higher for two straight months after dropping to 1.7% in September, as was expected due to the fading deflationary pull from energy prices.
Core inflation, excluding volatile energy, food, alcohol and tobacco prices, held at 2.7% for a third straight month in November.
The core rate is being propped up by the stickiness of services inflation, which only slid slightly to 3.9% in November from 4% during the previous month.

Markets have fully priced in a 25-basis-point interest rate cut from the ECB in December, which would mark the institution’s fourth trim of the year.
Speculation that the central bank could be pushed into a larger 50-basis-point cut has faded since last month, after slight improvements in the weak euro area growth outlook and a rebound in inflation.

Inflation came in slightly higher than forecast in October, while ECB policymakers, including executive board member Isabel Schnabel, have stressed the need for caution in monetary easing.
The ECB’s decision will largely be informed by the latest staff macroeconomic projections it will receive just ahead of its upcoming Dec. 12 meeting. The central bank will also be weighing the potential global impact of the recent election of Donald Trump as U.S. president, including whether he will follow through on his threats of universal trade tariffs and how such a step would impact European Union exports.

The euro was little-changed against the U.S. dollar and British pound following the data release.
Kyle Chapman, FX market analyst at Ballinger Group, said in an emailed note that the uptick in headline inflation was solely down to year-on-year energy price volatility, and that the ECB would look favorably on a 0.9 percentage point fall in month-on-month services inflation.  
“With the growth picture looking soft, there is still no doubt that inflation will fall to 2% on a sustainable basis next year,” Chapman said, adding that the market nonetheless appeared to have settled on a 25-basis-point move in December.
“The economy is not falling off a cliff just yet and there is uncertainty about where the neutral rate is, so there is no pressing need to start frontloading cuts,” he noted.
Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said the inflation figures, combined with recent data showing record low unemployment and higher negotiated wage growth in the third quarter, will prevent a 50-basis-point cut.
The final monetary policy decision will nevertheless remain a “close call,” with the more dovish members of the ECB pushing hard for a 50-basis-point trim, Debono said. If the central bank does stick with a 25-basis-point move, it will likely follow this step with cuts of the same size at both of its following meetings in January and March, she added. More

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