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Overseas news
Major US stock indices rose Thursday despite mixed corporate earnings and geopolitical uncertainty. Investor sentiment was likely lifted by news that US President Donald Trump will meet with China President Xi Jinping next week.
The meeting may help calm the escalating trade tensions between the 2 countries. The US and China make up a huge share of the global economy and so their trade relations are of concern to investors.
Meanwhile, oil prices jumped nearly 5% to their highest in 2 weeks. This happened after the US imposed sanctions on major Russian oil companies, prompting Chinese and Indian companies to consider cutting oil imports from Russia.
The sanctions are part of efforts to end the Russia-Ukraine war, which has affected international oil prices and the global economy for years.
Higher oil prices can affect many industries, like the manufacturing sector which uses oil to power its factories. As a result, prices of goods may increase if fuel costs remain elevated for an extended period.
Additionally, the Bank of Japan (BOJ) warned Thursday that the country’s stock market may be overheating and is vulnerable to a sharp decline due to uncertainty over US trade policies.
The BOJ said in a report that the potential decline may hit financial institutions though it also noted that the country’s financial system remains stable.
Local developments
Local vehicle sales dipped by 3.8% year-on-year in September amid weaker demand for passenger cars. Though sales fell YoY for the 3rd consecutive month, a slight improvement from the previous month hints at a gradual recovery.
Vehicle sales data can help indicate economic health. Such sales tend to pick up when things are good, and consumers and businesses are more willing to spend. The opposite may happen when the situation isn’t as positive.
Further, the budget deficit narrowed by 9.22% year-on-year in September to reach P248.1 billion, as probes on flood control infrastructure curbed government spending and delayed project implementation.
A budget deficit is what happens when the government spends more than it earns. It can be lessened by increasing revenue (usually through taxes) and/or cutting spending.
The global news may have a bigger effect over time, but it may be too soon to tell how things will go. You may want to remain cautious while keeping an eye on further developments for now.
