Last week, the international market was volatile, and international oil prices fluctuated more. Federal Reserve Chairman Powell made hawkish comments.
In the global market, the US stock market continued to rebound, with the Dow up 0.65%, the Nasdaq up 2.37%, and the S&P 500 index up 1.31% for the week. The performance of the three major European stock indices is divided, with the FTSE 100 index in the UK falling 0.77%, the DAX 30 index in Germany rising 0.30%, and the CAC 40 index in France falling 0.03%.
There are many highlights this week, with the latest Consumer Price Index (CPI) and retail data from the United States becoming important references for external evaluations of the Federal Reserve's monetary policy outlook for December. Federal Reserve officials will also continue to make intensive statements. UK inflation and employment data will be released, or expectations of interest rates peaking may be strengthened. As the financial reporting season draws to a close, American retailers and multiple celebrities will showcase their performance in concept stocks.
The US government is once again facing the test of suspension
At the end of September, the US Congress reached a 45 day temporary agreement at the last minute to avoid a government shutdown. This week, the White House will once again face a new round of tests, as the new Speaker of the House of Representatives, Johnson, takes office and faces a huge disagreement between the two sides. Due to concerns about government debt and rising debt costs, hardliners within the Republican Party may insist on spending cuts, which clearly cannot win the approval of Democrats.
It is worth noting that rating agency Moody's has downgraded the outlook for the US sovereign credit rating from stable to negative, citing rising interest rates and doubts about the government's ability to implement effective fiscal policies. The negative outlook means that there may be a downgrade in the future, and US fiscal security is increasingly attracting attention from the outside world.
Powell stated at a panel meeting of the International Monetary Fund (IMF) last week that he is "satisfied" with the progress made so far in reducing inflation in the United States, but does not yet believe that interest rates are sufficient to lower inflation to the target of 2% for a period of time. This week, Federal Reserve officials will continue to speak intensively and need to closely monitor changes in the wording of policy prospects.
In terms of data, the CPI in October will become the biggest focus. With energy prices falling, institutions expect the overall CPI to drop from 3.7% to 3.3% last month. However, high rent and service prices may face resistance in cooling the core CPI, and the expected increase will slightly decrease by 0.1 percentage points to 4.0%. Retail sales may show signs of cooling, with one of the largest retailers in the United States, Target, recently commenting that consumers are starting to slow down their pace of consumption and are expected to decline by 0.1% month on month. In addition, indicators such as the start of new housing construction, construction permits, industrial output, and the number of initial applicants for unemployment benefits are also worth investors' attention.
As the earnings season draws to a close, this week's earnings report of American retailers will become the focus, including Wal Mart, Target, Home Depot and other performances, which will serve as a reference for the outside world to measure the resilience of American consumers. Chinese concept stocks Alibaba, JD.com, NetEase, Vipshop, Tencent Music, and Xiaopeng Motors will also release financial reports.
Crude oil and gold
International oil prices have fallen for the third consecutive week, as market concerns about demand prospects and expectations of oversupply have outweighed potential supply risks in the Israeli-Palestinian conflict. WTI crude oil fell 4.15% to $77.17 per barrel for the week, while Brent crude oil fell 4.08% to $81.43 per barrel for the week.
Barbara Lambrecht, a commodity analyst at Commerzbank, said in a report: "The sentiment in the oil market has changed: the initial geopolitical risk premium pricing ended with a significant adjustment
Industry statistics show that recent crude oil production in the United States has reached a historic high, and the transportation capacity of Russian maritime oil is also at a high level in the second half of the year. Manish Raj, Managing Director of Velandera Energy Partners, stated that the possibility of oversupply of oil may be the main reason for the recent decline in oil prices
The international gold price recorded its first decline in nearly four weeks, and Powell's hawkish comments helped stabilize and rebound the US dollar, significantly cooling the market's enthusiasm for long trading. The COMEX gold futures contract for November delivery on the New York Mercantile Exchange fell 2.96% on the week to $1932.60 per ounce.
Adam Koos, President of Libertas Wealth Management Group, said: "The tailwind for gold has subsided. Part of the reason for the previous rebound was the belief that the United States would reach peak interest rates and gradually bring inflation back, but in the shadow of the Fed's hawkish comeback, these seem insignificant
Lukman Otunuga, Market Analysis Manager at FXTM, believes that as concerns about the spread of tensions in the Middle East to a wider region ease, gold prices are also affected by declining investor interest. If the regional situation does not escalate, it may pave the way for further decline. In summary, the evolution of the Middle East situation will become a key factor in the ultimate flow of funds.
UK inflation expected to continue to cool
Last week, European Central Bank President Lagarde stated that the European Central Bank will not cut interest rates for at least the next few quarters. Lagarde stated that if interest rates remain at current levels for a sufficiently long time, the inflation rate in the eurozone will fall to the European Central Bank's target of 2%.
The European Central Bank held its key deposit rate at 4.0% in October. With inflationary pressure falling and economic momentum declining, several European Central Bank regulators have hinted this month that the interest rate hike cycle has reached its end. The President of the French Central Bank, Ville Roux, stated that unless more shocks must be dealt with, the European Central Bank will not raise interest rates again. Vileruva stated that the inflation rate in the eurozone has significantly decreased over the past year, and although there have been some fluctuations, the trend is clearly downward. The large-scale interest rate hikes by the European Central Bank since July last year have had a particular impact on potential inflation. "The solution to inflation is interest rates, which is not pleasant, but it is effective
The Bank of England and the European Central Bank have a similar stance, with Bank of England Governor Andrew Bailey stating that discussing interest rate cuts is premature and policies need to remain restrictive.
The Chief Economist of the Bank of England, Huw Pill, believes that the Bank of England does not need to further raise interest rates to curb inflation, as current policies are already restrictive. Maintaining interest rates at the current level will continue to lower inflation. Maintaining a restrictive stance is key to achieving inflation targets, "Pier said.
The UK will release inflation data this week. The institution expects the overall CPI to decrease from 6.7% to 4.9%, and the core CPI to decrease from 6.1% to 5.6%. The September employment report is also important as income changes will affect the direction of inflation in the coming months. It is worth noting that according to the latest Purchasing Managers' Index (PMI) data, UK corporate product prices accelerated to a three-month high in October, indicating a certain upward risk in prices.
Highlights of this week