The international market changed last week, and European inflation hit a new high in September, British Prime Minister Tras announced his resignation, and Federal Reserve rate hike expectation of fluctuations.
In terms of global stock markets, US stock rebounded strongly, the Dow Jones Industrial Average rose 4.89%, Nasdaq html rose 5.22% in 2 weeks, and S&P 500 rose 4.74%. The three major European stock indexes rose, the UK's FTSE 100 index rose 1.62% weekly, the German DAX 30 index rose 2.36% weekly, and the French CAC 40 index rose 1.74% weekly.
This week, the trend of the central bank of many countries will become the focus. As inflation is close to 10%, the market expects the ECB to raise interest rates for the second time in a row, hike rate 75 basis points ; after 100 basis points in July, as the real estate market cools down, the Bank of Canada may consider raising interest rates 50 basis points/75 basis points to cope with potential economic risks; the Bank of Japan entered the market to buy government bonds last week to ease pressure on the yen, but the market generally believes that the ultra-loose position in the latest monetary policy meeting will not change . At the same time, The United States will announce the third-quarter GDP (GDP) this week; European and American economies purchasing managers index (PMI) may be mixed; the US stock financial report season enters a intensive release period, and star stocks such as Apple , Amazon will disclose their performance.
U.S. PCE pressure in September does not decrease
Feder Blackbook shows that the economy in some regions has begun to slow down, price pressure is still rising, and companies' attitudes towards the prospects are becoming more and more pessimistic. Several Fed officials reiterated inflation risks in their latest speeches, but suggested that the pace of interest rate hikes may be adjusted in the future. The market has digested the expectation of a 75 basis point rate hike in November, but the intensity of policy in December will still depend on data performance.
US Treasury Secretary Yellen (Janet Yellen ) said last week that plaguing the US economy has not been deeply rooted. While more work is needed to reduce inflation, there are also some early signs that producer costs have fallen on indicators such as supplier delivery and shipping costs. Yellen said there was no sign that wage and price pressure would generate higher inflation expectations in the medium term. In terms of
data, the United States will release the first reading of GDP for the third quarter this week. After experiencing the shrinkage in the first two quarters, the market generally expects that the growth rate of the previous quarter is expected to rebound to 2%. However, with the expectation of interest rate terminals pointing to 5%, the risk of a U.S. economic recession next year cannot be ignored. As one of the inflation indicators that the Federal Reserve is most concerned about, considering the continued release of the impact of inflation and wage rises in the service industry, core personal consumption expenditure (PCE) is expected to rise further to 5.2%, which may affect the expectation of interest rate hike in December .
The United States will also announce the manufacturing and service industry PMI in October. Weak commodity demand may further suppress manufacturing activities, but the index will still be in the expansion range. Service industry activities are expected to gradually recover, but they may still not be able to return to the dividing line of prosperity and drought. As mortgage interest rates approach 7%, new and existing home sales are expected to cool further in September, and low inventory is expected to continue to support high housing prices.
US stock earnings season has entered a intensive release period, and this week is the busiest week. Technology giants such as Apple, Google , Amazon and Microsoft will disclose their performance, and the market focuses on changes in corporate operations under the economic slowdown. The two major oil giants ExxonMobil and Chevron will also release financial reports, and their views on future capital expenditure plans may have an impact on the global energy supply outlook. Corporate financial reports worth paying attention to include Coca-Cola, Kraft Heinz, McDonald's , Boeing , GE, etc.
Crude oil and gold
International oil prices fluctuated widely last week, and investors evaluated the economic outlook and the impact of oil-producing countries' shrinking supply. As of the close, the recent month contract of WTI crude oil rose 0.47% weekly to US$85.05 per barrel, and the recent month contract of Brent crude oil rose 2.04% weekly to US$93.50 per barrel.
U.S. President Biden announced the release of 15 million barrels of crude oil from strategic oil reserves, the last part of the 180 million barrels of reserves announced in March.The U.S. government also said it would take action to supplement its strategic reserves. If the price of crude oil fell to $70 per barrel, the government would enter the market to purchase to stabilize the price. Biden once again called on domestic producers to increase production. After OPEC+ announced a 2 million barrel cut this month, U.S. calls for selling reserves and increasing production have also sparked concerns about insufficient crude oil supply.
Oil prices are also affected by risky asset fluctuations, and investors are worried that radical currency tightening by the Federal Reserve and other major central banks will lead to a sharp decline in the global economy, which will in turn impact demand. "The current very tight spot market conditions also support the futures price . Looking up, demand concerns related to global recession concerns may establish technical resistance around $93."
international gold price bottomed out and rebounded, and the COMEX gold futures for December delivery on the New York Mercantile Exchange closed at $1,656.30 per ounce, up 0.47% this week. U.S. Treasury yields surged last week as investors feared the Fed's further rate hikes, while the U.S. economy could soon fall into recession, pushing global stock markets and commodities such as gold lower, and gold prices briefly fell to their lowest level in two and a half years. "It's an uphill struggle for precious metals now. In an environment of high inflation and low growth, people are worried that central bank policies will be tightened further, which means investors will not actively buy gold. If the US dollar continues to rise in the future, gold will be on the verge of further collapse."
ECB may raise interest rates for the second time 75 basis points
EU leaders held a meeting last week in Brussels . All parties have not reached an agreement on the core issue of setting the natural gas price ceiling, highlighting the fact that EU countries still have differences on specific measures to deal with the energy crisis . As Germany and other countries insist on refusing to set upper limits on natural gas prices, the issue of setting upper limits on natural gas prices has been put on hold again. According to the statement, EU leaders agreed that in view of the current energy crisis, efforts should be continued to reduce demand, ensure supply security, avoid implementing energy rations, and at the same time, energy prices in the entire EU market should be reduced and the integrity of the single market should be maintained.
This week, the European Central Bank will hold a interest rate meeting. As the final value of euro zone consumer price index (CPI) rose to a record high of 9.9% in September, the market generally expects the ECB to raise interest rates for the second time by then 75 basis points. The market focus will focus on the communication between European Central Bank Chairman Lagarde on policy prospects. At present, the European economy is facing the risk of a decline or even a recession, but it is urgent to start to lower prices. The hawkish stance may further push the market's expectations of the peak interest rate of the European Central Bank to more than 3.00%. In terms of
data, Europe will release PMI data for manufacturing and service industries in October, and signs of cooling down in business activities are expected to worsen further. Germany's GDP may shrink by 0.2% in the third quarter, and the EU's largest economy entering a recession quagmire may mean that the cold winter of the European economy is coming.
With British Prime Minister Liz Truss' resignation last week, Conservative MPs will vote for two new prime minister final candidates this Monday, and a final vote will be held on Friday. Polls show that former British Chancellor of the Exchequer Sunak (Rishi Sunak) and former British Prime Minister Boris Johnson (Boris Johnson ) are the biggest hits.
UK Treasury yields have stabilized after the Bank of England exited market intervention last week. Bank of England Deputy Governor Ben Broadbent said interest rates may not have to climb as markets have expected. He said: "It is not clear whether the UK rate hike needs to meet investors' expectations. If market expectations are realized, the economy will suffer a blow. In the face of soaring inflation, the reasons for tightening policies are obvious, but demand will slow to a certain extent due to rising prices. If interest rates rise along the current path, it may cause GDP to fall by 5%. "
Highlights of the week
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