The international market has been changing last week, with the performance of American star technology stock mixed, and the ECB announced the second consecutive rate hike of 275 basis points to cope with inflation pressure.
U.S. stock rebounded strongly, with the Dow Jones Industrial Average rising 5.72% weekly, Nasdaq html up 2.24% weekly, and S&P 500 html up 3.95% weekly. The three major European stock indexes rose across the board, with the UK's FTSE 100 rising 1.12% weekly, the German DAX 30 rising 4.03% weekly, and the French CAC 40 rising 3.94% weekly.
has many highlights this week. Fed is expected to raise interest rates for the fourth consecutive time 75 basis points, and the clues of the interest rate hike path have attracted attention. The central banks of many countries will issue interest rate resolutions, and the United Kingdom, Norway, Australia and Malaysia will follow up and raise the benchmark interest rate. The United States will release its October non-farm report, which may show a slight cooling. The final value of PMI in October will remain below the boom and bust line , aggravating concerns about recession.
The US labor market may cool down
The US third quarter GDP annualized growth rate was 2.6%, ending the decline that had fallen for two consecutive quarters. U.S. President Biden said data shows that economic recovery is continuing to move forward and the government needs to take more action to lower prices.
US Treasury Secretary Yellen said about the economy that there are some signs of a healthy slowdown, which may have a positive impact on curbing high inflation. Yellen still doesn't think there will be a recession, "It's a fully-employed economy, and the labor market is booming. We want to see a slowdown in growth, which is part of controlling inflation." She said, "I see a path to lower inflation while keeping the labor market strong. I don't think there will be a recession, but if it happens, we still have enough fiscal room to deal with it."
The Fed will usher in the second-last interest rate decision this week, and the market generally expects a fourth consecutive rate hike of 75 basis points. Expectations that policy efforts may slow down are heating up. However, as one of the inflation indicators that the Federal Reserve is most concerned about, the Personal Consumer Expenditure Price Index (PCE) stopped falling and rebounded in September, and inflationary pressure still leaves uncertainty in policy choices in December. In terms of
data, non-agricultural developments in October are undoubtedly a major highlight. The U.S. labor market is still in good shape, and a strong labor market is expected to support job growth as job openings remain high, but some companies announced a decision to adjust their recruitment during the financial report season is worth paying attention. The market expects to add 200,000 new jobs this month, down from 263,000 in September, setting a new low for the year. At the same time, the unemployment rate will rebound slightly to 3.6%, and the growth rate of individual wages is expected to slow further. The ISM October PMI of the American Supply Management Association is also worth paying attention to. It is expected that the manufacturing PMI will fall below the boom-bust line with a cooling demand, and the expansion rate of the service industry will decline.
financial report season has entered the middle and late stages, and a number of key companies in industries including healthcare, consumer discretionary products, energy and other industries will announce their performance this week. companies worth paying attention to include: Eli Lilly, Pfizer , CVS Health, Starbucks , AMD , Qualcomm , Uber, Airbnb, Marriott Hotel , Marathon Oil, etc.
Crude oil and gold
International oil prices rose slightly last week, and investors are still paying attention to the impact of the epidemic on energy demand. WTI crude oil contract closed at $87.90 per barrel, up 3.35% weekly, and Brent crude oil contract closed at $95.77 per barrel, up 2.43% weekly. Stephen Innes, managing partner of
SPI asset management, pointed out that strong U.S. export demand and possible Fed policy shifts have had a positive impact on oil prices, and he expects the Fed to start raising interest rates slightly after November. However, it is necessary to pay attention to the impact of the epidemic and economic slowdown on energy demand.
As the Federal Reserve's resolution approaches, international gold price weakens at the end of the trading session and gives up gains during the week. The COMEX gold futures contract for the New York Mercantile Exchange in November delivered closed at $1,639.60 per ounce, down 0.72% on the week.
Although the market expects the Fed's radical policies to end, uncertainty remains.Rupert Rowling, a market analyst at Kinesis Money, believes that although the trajectory of the interest rate curve may ease, it may continue to climb for several months in the future. It is still an environment where interest rates are still rising. "So, gold is unlikely to rise sharply in the short term, and it is more likely to consolidate near the current level of $1,650 per ounce."
Sevens Report Research believes that the opportunity to buy at the bottom of may be coming soon. The report notes that when the peak of the Fed's hawkish sentiment is truly reached, it should provide a good buying opportunity for investing in gold, as real interest rates will decline with the more loose monetary policy stance.
Bank of England may raise interest rates 75 basis points
To cope with the impact of high inflation, last week ECB hikes for the second consecutive 75 basis points. The ECB said it expects further interest rates to be raised in the future to ensure inflation returns to 2% in a timely manner. The ECB plans to continue to fully reinvest the principal of the maturing securities purchased by its Asset Purchase Program (APP) and has revised the terms of the long-term refinancing business to encourage banks to repay these multi-year loans in advance.
ECB President Lagarde said the Management Committee decided to continue discussing in December how to reduce bonds purchased under the conventional quantitative easing (QE) plan and determine key principles. The deflationary balance sheet framework will enable policy makers to prepare financial markets and evaluate investor responses before taking action.
Europe will release October CPI data this week. With the inflation rate in September reaching 10%, the market expects that the October growth rate will further rise to 10.3%, and at the same time, core CPI will approach 5%. The final value of the October PMI in Euro zone will also be announced. The continued expansion and decay between manufacturing and services indicates that the European economy is sliding towards a quagmire of recession.
The UK government and the Ministry of Finance said last week that the medium-term fiscal plan originally scheduled to be released on October 31 will be postponed to release on November 17. Secretary of the Exchequer Hunter stressed that the first priority is to restore economic stability and market confidence in the UK's "received payments" of fiscal discipline. He said the delay in issuing the tax and expenditure plan is hoped to build it on "as accurate as possible economic forecast " and would reflect how debt reduction in the medium term.
The Bank of England will hold a interest rate meeting. With the launch of quantitative tightening plans starting from November 1, the tightening of monetary policy will continue to speed up. The market expects that the Bank of England will also raise interest rates by 75 basis points at this meeting, pushing interest rates to a high of 3.0%. You can pay attention to the central bank's latest inflation and economic outlook forecasts. Considering the shift in fiscal policy and concerns over downward pressure on the economy, institutions have lowered the central bank's interest rate hike to 50 basis points next month, because while inflation has reached double-digit highs, higher interest rates will have a greater impact on businesses and households.
This week's highlights
