Libertarian economist Javier Milei won Argentina's presidential election on promises to dollarize the economy, close the central bank, and make steep spending cuts, representing a sharp rebuke of the outgoing centre-left government, which many blame for economic troubles. Milei aims to balance the budget by end-2024 via austerity, warning that "very tough months" may lie ahead, though he insists a "fiscal balance is non-negotiable." With inflation nearing 150%, negative reserves, and a sliding peso, the export sector is "paralysed" by drought-driven crop shortages and producers holding crops awaiting expected currency reforms. Though Milei's shock therapy could spur a crisis, gradualism risks losing the political momentum.
Asian stocks retreated Friday as weak Japanese and European data stirred growth worries. Chinese indexes declined ahead of pivotal manufacturing numbers, while Japan's Nikkei uniquely rose 0.6% as low inflation fed hopes the Bank of Japan retained its dovish stance, though most other markets lacked direction with the US on holiday. The McDonald's boycott following Israel's military offensive has led to declining sales, with Egypt's branch reporting 70% lower sales volume in October and November.
Gold held steady, set for a second straight weekly gain, as a weaker dollar and confidence the Fed was done with rate hikes made the metal more appealing. However, strong job data kept rate-cut hopes in check, leading to some hesitation in gold prices, though above $2,000, with the bullish trend still intact as gold floats well above key moving averages.
Oil prices swung due to OPEC+ disputes and economic uncertainties. The cartel's meeting delay triggered a brief 5% price drop on Wednesday, followed by a modest Friday rebound. Weakened crude demand stemmed from global economic weaknesses, including contractions in European and Japanese PMIs, uncertainties in Chinese stimulus, and a property sector crunch affecting 2023 diesel demand in China. Despite challenges, some analysts see oversold conditions as an opportunity for a potential holiday-thinned market rally upon traders' return next week.
The dollar sank against major currencies with the Index dipping below 104, set for another bad week. Across the Atlantic, euro zone PMIs pointed to easing recession forecasts in Germany despite French downturns. Meanwhile, sterling rebounded after British MoF Hunt's dampened growth projections briefly dropped the pound. Though thin liquidity kept Asian pairs in range-bound movements, the yuan approached a 4-month peak on strong fixes while dovish BoJ policies assisted yen’s rally.