Top 5 things to watch in markets in the week ahead By

© Reuters

By Noreen Burke — The minutes of the Federal Reserve’s meeting on Wednesday will be the main highlight of the holiday-shortened week, as investors watch for any indication that the pace of rate hikes may be slow. The most important shopping period of the year kicks off on Friday, which will be a key test for US retailers. The latest global economic forecasts from the OECD on Tuesday along with global PMI data will provide important insight into the health of the global economy. Meanwhile, China may increase economic support measures and there are signs that the dollar king may be about to lose its crown. Here’s what you need to know to start your week.

  1. Nutrient minutes

The Fed is due to publish its November meeting on Wednesday as investors await any sign that policymakers may be considering slowing the tightening process after rates hiked faster this year than at any time since the 1980s.

Fed Chairman Jerome Powell and other policymakers have indicated that the central bank could move to next month to avoid tightening more than necessary and sending the economy into recession.

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At the same time, Powell said that rates may need to go higher than the 4.6% that policymakers thought in September by next year.

The economic calendar for the coming week also includes the , , , for October and data for November.

  1. black friday

Against a background of rising inflation and rising interest rates, a key test of consumer demand arrives on November 25, when retailers launch “Black Friday” sales – traditionally one of the strongest shopping days of the year.

Recent data showed that US retail sales rose more than expected in October, indicating that consumers may be on firmer footing heading into the end of the year. Consumer spending accounts for more than two-thirds of US economic activity.

Retailers have delivered mixed results in the latest earnings season. Last week, Walmart (NYSE: ) raised its annual sales and profit forecast on expectations that demand for groceries would hold despite higher prices, and Target (NYSE: ) forecast a surprise drop in holiday quarter sales after warning of “dramatic changes” in consumer behavior that were hurting demand.

Amazon (NASDAQ: ), the world’s largest online retailer, said on October 27 that it was preparing for slower growth as “people’s budgets are tight” due to inflation.

  1. OECD forecasts/PMI data
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The OECD will publish its latest forecasts for the global economy on Tuesday and this, together with a preliminary reading of business activity from a number of countries in November, will provide insight into the health of the global economy.

The OECD’s most recent forecasts, made in September, showed that the outlook for next year is deteriorating and the US economy is expected to fall into recession.

PMI data from the , the and the US on Wednesday may add to the gloom. In most European countries, PMIs are below the 50 mark that separates expansion from contraction.

Britain is already facing a long recession. Eurozone economic growth has held up better than expected and labor markets remain relatively strong. But recession risks remain looming amid energy shortages and rising inflation.

  1. Dollar over the peak?

It peaked at a 20-year high of 114.78 in September and has been falling ever since. With the currency on track to post its biggest quarterly loss since the second quarter of 2017 investors are now asking if it has peaked.

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The rise of the dollar has been a dominant trading theme in 2022, thanks to the Fed’s rapid rate hikes, giving the currency an edge among other investors.

But analysts from Goldman Sachs said on Friday that the dollar’s peak still appears to be “several quarters away,” noting that it does not expect the Fed to start easing until 2024. It said that it is not expected to the United States soon grew out.

  1. China

China’s central bank’s pledge to step up policy support measures should be on display on Monday, when key lending rates are set.

The People’s Bank of China is expected to keep key lending rates unchanged for the third straight month, with policymakers reluctant to drive it lower by easing monetary conditions further.

Authorities are looking for ways to support economic growth without fueling financial instability.

Other regional central banks will also have policy meetings during the week. A jumbo 75 basis point hike is expected on Wednesday, and the Bank of Korea is seen tightening again, but perhaps only by a quarter point.

— Reuters contributed to this report


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