Last week, the international market was volatile, and the situation in the Middle East remained tense. The minutes of the Federal Reserve meeting showed internal divisions.
In terms of the market, the US stock market continued its upward trend, with the Dow Jones Industrial Average rising 1.21%, the Nasdaq rising 1.13%, and the S&P 500 index rising 1.11%. The three major European stock indexes saw mixed performance, with the FTSE 100 index in the UK falling 0.33%, the German DAX 30 index rising 1.32%, and the French CAC 40 index rising 0.48%.
There are many highlights this week, with the US retail monthly rate testing economic resilience, and the European Central Bank expected to cut interest rates for the second consecutive time. The US stock earnings season has entered its second week, and in addition to the financial sector, Netflix has become one of the first star technology stocks to announce its performance, attracting attention. Multiple countries will release heavyweight price indicators. Among them, Canadian inflation data is crucial for policy decisions in two weeks, and the market already expects a 25 basis point interest rate cut. The Consumer Price Index (CPI) for the third quarter of New Zealand will be released on the 16th, and the country's Federal Reserve has just cut interest rates by 50 basis points. It is expected that borrowing costs will be further reduced in November. After the latest statement by Japanese Prime Minister Shigeru Ishiba, the importance of Japan's CPI data has decreased. The outside world hopes to find signs of the Japanese economy maintaining positive momentum through machinery orders and trade data, which may become a factor affecting interest rate hikes.
Monthly retail rate or acceleration in the United States
With the recent strengthening of US economic indicators, investors have lowered their expectations of aggressive interest rate cuts. The outside world continues to pay attention to the upcoming data and weigh the direction of future policy paths. The retail sales monthly rate for September this week will be the main highlight. A stronger than expected report may not be welcomed by the market as it will further suppress interest rate cut bets. The latest institutional forecast shows that the retail sales rate increased by 0.3% month on month last month, better than August's 0.1%, and consumer spending vitality will support a soft landing for the US economy.
The manufacturing indicators of the New York and Philadelphia Federal Reserve in the coming week indicate that the industry accounts for 12% of the US gross domestic product (GDP), and various regions in the US have been facing continuous contraction pressure recently. Other noteworthy data include industrial output, construction permits, and monthly rates of new housing starts in September.
The US stock earnings season has begun. Streaming giant Netflix will be one of the first large tech companies to announce its earnings. At the same time, the performance of companies such as Bank of America, Goldman Sachs, Citigroup, Johnson&Johnson, United Health, TSMC, and American Express is also worth paying attention to.
Crude oil and gold
International oil prices have risen for the second consecutive week, as investors weigh the risks that may threaten the flow of crude oil in the region following the escalation of the situation between Israel and Lebanon. WTI crude oil rose 1.59% to $75.56 per barrel in the near month contract week, while Brent crude oil rose 1.27% to $79.04 per barrel in the near month contract week.
Rebecca Babin, a senior energy trader at CIBC Private Wealth, stated that there has been significant market volatility in the past week, with market attention focused on news of Israel's possible targeting of Iran's energy infrastructure and the subsequent impact of China's stimulus measures.
Fawad Razaqzada, a market analyst at City Index, a broker specializing in contract for difference and spread trading, said, "It is understandable that traders do not want to be caught making short bets on oil as we enter the long weekend. The possibility of Israel striking Iran will increase the risk of oil price fluctuations when Asia opens next week
The international gold price has risen for five consecutive weeks, and COMEX gold futures for October delivery on the New York Mercantile Exchange rose 0.45% to $2657.40 per ounce.
The US inflation data has consolidated the prospect of interest rate cuts this year, keeping the US dollar below its recent high, and the safe haven demand triggered by geopolitical tensions in the Middle East has also boosted gold. Jim Wyckoff, Senior Market Analyst at precious metals analysis firm ITCO Metals, said, "The Producer Price Index (PPI) for industrial products is favorable for bulls in the precious metals market, indicating that the Federal Reserve is still expected to cut interest rates by 25 basis points this year
Daniel Pavilonis, Senior Market Strategist at RJO Futures, a futures institution, said, "The economy remains relatively strong, and the Federal Reserve is still in a complex environment. They are considering interest rate cuts because some industries have already slowed significantly, such as real estate. Due to geopolitical tensions, inflation concerns, and election uncertainty, it is expected that gold prices will reach $3000 by 2025
The European Central Bank is expected to cut interest rates
The European Central Bank will hold an interest rate meeting this week, and it is widely expected to cut interest rates by 25 basis points, which will mark a continuous action after September. The recent weak Eurozone activity data and overall inflation rate have increased investors' confidence in further policy easing this month.
Investors will also pay attention to any clues about the future path of interest rates, and the press conference by European Central Bank President Lagarde is undoubtedly the focus. However, HSBC economists stated in a report that "we expect limited guidance on interest rate changes thereafter." The bank predicts a 25 basis point rate cut at every meeting until April next year, until the deposit rate drops to 2.25%.
The main data for the Eurozone in the coming week include the European Central Bank's bank loan survey on the 15th and the Eurozone industrial production rate, while the EU summit is scheduled to be held from the 17th to the 18th. In addition, the final inflation values for France and Spain in September, as well as the ZEW sentiment index for the Eurozone and Germany, will also be released.
The September PMI survey showed that price pressure on the UK private sector fell to a 42 month low, indicating a decrease in both overall and core CPI as oil prices fell to negative values year-on-year. Bank of England Governor Bailey stated earlier this month that if data continues to indicate progress in inflation, they may need to be more proactive in cutting interest rates.
The employment report for August and retail sales for September in the UK are about to be released, and the employment and salary indicators are receiving more attention. According to data from the UK Overnight Index Swap (OIS), investors believe that there is a 75% chance of a 25 basis point rate cut on November 7th, and a 60% chance of another rate cut in December.
This week's highlights