Even though the lower oil price is positive for the global economy

Market movers today

In the euro area the flash estimate for HICP inflation in November is released and we expect it to decline back to this cycle’s low of 0.3% y/y in November. Falling energy prices drag down the headline but we also expect euro core inflation to decline to a new historical low of 0.6% y/y. This should keep the pressure on the ECB to ease further.
Sweden will release GDP numbers for Q3. We expect real GDP to have grown by 2.2% y/y in Q3 – down from 2.6% y/y in Q2.
In Norway focus will be on the results of Norges Bank's latest regional network survey as well as on unemployment and wage data cf. below.

Selected market news

The oil price tumbled yesterday after the OPEC announced that it would not cut production in an effort to curb the drop in the oil price. The continued drop in the oil price is good news for the global economy but bad news for oil exporters and particularly for oil-exporting countries with weak economies and budget problems such as Venezuela and Russia.

With the oil price dropping nearly USD5/barrel directly on the back of OPEC’s announcement, commodity currencies such as the NOK and the RUB have come under renewed pressure. However, the lower oil price is good news for oil-importing countries – particularly for those countries that have large current account deficits, such as Turkey.

With the oil price continuing to drop, deflationary pressure continues to increase in Europe, which fuels speculation that the ECB might soon initiate quantitative easing. That said, the drop in the oil price is mostly a positive supply shock to the European economy, which on its own should not warrant monetary easing.

Even though the lower oil price is positive for the global economy, there has not been a major reaction in the global stock markets. This morning the Asian stock markets are trading mixed.

Japan released inflation data for October this morning. Inflation dropped to 2.9% y/y from 3.0%y/y in September. Retail sales dropped 1.4% from September - more than the consensus expectation of a 0.5% decline. However, an unexpected increase in production shows some strength among manufacturing exporters.

The US markets were closed yesterday for Thanksgiving.

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