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The main economic news for Friday, January 10:
1. U.S. House votes to stop Trump’s military activity
The U.S. House of Representatives voted on Thursday on termination of President Donald Trump’s war powers to use American armed forces against Iran as the Middle East remained tense after the U.S. killing of a top Iranian commander and Iran’s retaliatory missile strikes. The resolution passed 224-194 along party lines in the Democratic-controlled House with nearly all Republicans opposed. The measure orders to stop President Donald Trump from further military action against Iran without Congress’ consent. The vote came just hours after Trump said that Iranian military commander Qassem Soleimani was killed by a U.S. drone strike in Iraq last week because he had planned to blow up a U.S. embassy.
2. Global shares increase on investor’s confidence
World shares hit record highs on Friday as relief over the de-escalation of U.S.-Iranian tensions bolstered investor confidence in faster global growth. MSCI’s broadest gauge of the world’s stocks in 49 countries surged to all-time high, while its index of Asia-Pacific shares outside Japan gained 0.44% to its best level since June 2018. Japan's index Nikkei also rose 0.44%. Meantime, Chinese shares slightly fell, but still traded near their eight-month peaks. European shares look set to gain, with pan-European Euro Stoxx 50 futures trading up 0.29%, German DAX futures FDXc1 climbing 0.26% and FTSE futures adding 0.42%. In the United States, the S&P 500 increased 0.67%, with its technology sector rising more than 1%. Apple gained 2.1%, driven by news that sales of its iPhones in China in December jumped more than 18% on year.
3. Household spending drops in Japan in November
Japanese household spending decreased for a second straight month in November, exceeding analyst forecasts. It suggests that a higher sales tax may weigh on private consumption for some time. The world’s third-largest economy is struggling to regain momentum after households cut their expenses following the sales tax hike in October and as slower global demand hit exports. Weak consumption will add to the risk that economic growth could stall in the final quarter of 2019 or even contract. Household spending fell 2.0% in November from a year earlier, government data showed on Friday, worse than a median forecast for a 1.7% decline. Spending rose 2.6% month-to-month, which is less than the median estimate for a 3.4% gain, while rebound from the steep 11.5% monthly drop in October.
4. U.S. unemployment up, despite the fall in claims
New claims for state unemployment benefits dropped more than expected last week, but the U.S. labor market maintains to show signs of weakening, with the number of Americans on unemployment rolls surging to more than a 1-1/2-year high at the end of 2019. According to the data from the Labor Department, initial applications for U.S. jobless benefits fell 9,000 to a seasonally adjusted 214,000 for the week ended January 4. The fourth straight weekly decline was almost overshadowed the jump in early December, which was blamed on a later-than-normal Thanksgiving Day. Economists forecast that claims would continue to fall in the latest week, probably hitting 220,000.
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