Last week, the international market was volatile, and the escalation of the situation in the Middle East pushed up oil prices. The US non farm payroll report showed strong performance.
In terms of the market, the US stock market rose for four consecutive weeks, with the Dow Jones Industrial Average up 0.09%, the Nasdaq up 0.10%, and the S&P 500 index up 0.22%. The three major European stock indexes performed poorly, with the FTSE 100 index in the UK falling 0.48%, the DAX 30 index in Germany falling 1.81%, and the CAC 40 index in France falling 3.21%.
There are many highlights this week, with September inflation data from the United States and the minutes of the Federal Reserve meeting likely to be the focus, and the pricing of the November interest rate cut experiencing significant fluctuations in recent times. In the eurozone, France is expected to announce its 2025 budget, and the European Central Bank will release meeting minutes. Investors will continue to closely monitor the impact of the Middle East situation, as rising oil prices may have an impact on price trends and central bank policy positions. The US stock earnings season is about to kick off, with the banking sector making its debut first.
US stock earnings season begins
The three-day US port strike came to a temporary end with the announcement of a preliminary agreement reached through negotiations between labor and management. The International Longshore Workers' Association and the American Maritime Union have agreed to extend the main contract until January 15, 2025. In addition to easing economic risks, this can also alleviate the political pressure that the Democratic government is facing as the November election approaches.
In the coming week, a large number of Federal Reserve officials will deliver routine speeches, focusing on their positions on the economy and monetary policy. At the same time, the minutes of the September Federal Reserve interest rate meeting will be released, and attention should be paid to the details of policy discussions. HSBC stated that the minutes of the meeting may indicate that many policy makers are inclined towards a more gradual 25 basis point rate cut, and "the minutes of the September meeting should further clarify the deliberations of the Federal Open Market Committee and the potential dual risks of economic and monetary policy
In terms of data, the focus may be on the September US Consumer Price Index (CPI) released on the 10th. According to preliminary data from S&P Global PMI, enterprise prices are rising at the fastest pace in six months. At the same time, although the ISM manufacturing survey showed a decline in price costs, non manufacturing reports confirmed the claim of accelerated price pressure.
Meanwhile, the preliminary consumer survey conducted by the University of Michigan in October will serve as an important reference for external evaluations of the US economy. Other noteworthy data include August trade data, September Industrial Producer Price Index (PPI), and initial jobless claims.
This week's new earnings season will kick off, with notable companies including JPMorgan Chase, Wells Fargo, BlackRock, New York Mellon, PepsiCo, and Delta Air Lines.
Crude oil and gold
International oil prices are soaring, the situation in the Middle East is escalating, and the market is waiting for Israel's response to Iran's missile attacks. Among them, West Texas Intermediate (WTI) rose 9.09% to $74.38 per barrel in the near month contract, and Brent crude rose 9.10% to $78.05 per barrel in the near month contract.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, stated in a report that "the possibility of Israel targeting Iran's oil infrastructure will certainly attract global attention and provide a significant energy boost to oil prices. There is clear upward potential, and if tensions escalate, coupled with the threat of reduced Iranian supply, it should provide further reasons for oil bulls to extend their tactical positions
International gold prices remain volatile, and the market is playing with the prospect of the Federal Reserve cutting interest rates. The COMEX gold futures contract for October delivery on the New York Mercantile Exchange rose 0.06% for the week to $2645.60 per ounce.
The US Department of Labor reported that the US unemployment rate dropped to 4.1% in September, further easing the pressure on the Federal Reserve to cut interest rates by another 50 basis points at its policy meeting on November 6th. Independent metal trader Tai Wong said, "The short-term decline in gold prices is due to the strong employment report in November, which seems to lock in the Fed's decision to cut interest rates by 25 basis points. The revision from last month is also higher, which we have not seen in several months
However, geopolitical factors may lead to panic buying. Phillip Streible, Chief Market Strategist at Blue Line Futures, said, "If geopolitics play a role over the weekend, gold futures could easily accelerate their rebound to $2700 and threaten historic highs
The European Central Bank is about to cut interest rates in October
The European Central Bank will release the minutes of its September meeting this week, and the market is watching for any clues that may add to the consecutive interest rate cuts at the policy meeting two weeks later.
At present, the Eurozone currency market has fully priced in another interest rate cut this month. Previous data showed a significant decrease in inflation in the eurozone last month. European Central Bank President Lagarde recently stated in a statement to the European Parliament that the central bank is more confident in its goal of restoring inflation to 2% and will consider this at its October meeting.
In terms of data, with the continued pressure of economic weakness in Germany, especially its important manufacturing industry, the manufacturing orders and industrial production data for August will be closely monitored. The final inflation rate in Germany in September will also become an important reference for price indicators in the eurozone.
Bank of England Governor Andrew Bailey stated last week that if inflation continues to decline, interest rates may be lowered, leading to a drop in the pound and UK government bond yields. There is speculation that the Bank of England may choose to cut interest rates consecutively in November and December. However, Huw Pill, Chief Economist of the Bank of England, warned in a subsequent speech that there may be risks of interest rate cuts being too far or too fast, indicating a more gradual quarterly pace of rate cuts.
After conflicting comments, there are still doubts about the speed at which the Bank of England may cut interest rates. The performance of the monthly GDP data for August this week may be crucial, along with the release of industrial and manufacturing productivity and monthly trade data. The data falling short of expectations may increase the credibility of Bailey's statements and boost further easing expectations.
This week's highlights
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