This week is packed with crucial economic events and business results. Eurozone inflation data will capture the region’s attention.
ADVERTISINGSome crucial economic data and company earnings will determine market sentiment this week. In the eurozoneseveral major economies will publish monthly data on the inflation and the Quarterly GDPwhich will provide information on the economic trajectory of the region and guide the future rate path of the European Central Bank (BCE).
Globally, attention will continue to focus on USAwhere the non-farm payrolls report will be the most important data for financial markets. The world’s largest economy is also about to release its third quarter GDP. Investors will pay special attention to the results of the main technology companiescomo Alphabet, Meta Platforms, Apple y Amazon.
On the other hand, the decision of Bank of Japan on interest rates, manufacturing and services PMIs China and the CPI of Australia will shed light on the evolution of these regional markets.
European economic data to take into account
It will be a busy week on the European economic front, with Eurostat releasing key data for major economies. Germany, SpainFrance and Italy will publish their consumer price indices (IPC) October preliminaries and the figures for GDP of the third quarter.
These economies experienced a strong decrease in inflation last month, mainly due to a significant year-on-year drop in energy prices. However, the Eurozone composite CPI will be the most influential data for the region.
General inflation fell to 1.7% year-on-yearbelow the 2% target, marking the lowest level since April 2021. The European Central Bank (ECB) expects inflation to rise again in October due to base effects. Consensus forecasts suggest that the annual CPI could have increased to 1.9% in October, while core inflation could have decreased slightly to 2.6% year-on-year.
The German economy remains weak and the Spanish economy maintains its growth path
Regarding the Gross Domestic Product (GDP) figures of these four economies, Germany still is the weakestwith a contraction of its economy 0,1% in it second trimester. The German manufacturing sector has been contracting for two years, which has considerably hampered the economy as a whole.
On the contrary, France, Italy and Spain experienced a economic growth in the first two quarters, highlighting Spain as the fastest growing economy of this group. The three countries are expected to maintain similar growth trends in it third quarterwhile the German economy is expected to continue contracting by 0.1%, according to consensus expectations.
In it United Kingdomhe annual budget of the Government will be the center of attention, as the Executive faces the challenges of increasing the deficit, slowing economic growth and controlling inflation. The focus will be on taxes, public spending and social measures.
US labor market data changes expectations
The October nonfarm payrolls report will be the most important data for world marketssince it will offer new tracks about the trajectory of American labor market.
The data about the employment in the United States they were surprisingly good in Septemberwith 254,000 new jobs and an unemployment rate that fell to 4.1% from 4.2% the previous month.
The strength of the labor market has changed expectations, and markets now expect that the Federal Reserve continue to lower rates to a slower paceof 0.25% in November, compared to the 0.5% previously expected. According to consensus forecasts, the US could have added only 110,000 new jobsthe lowest figure since February 2021while the unemployment rate is expected to remain at 4.1% in October.
A weaker labor market probably would increase the chances that the Federal Reserve accelerate your relaxation cyclewhich could encourage markets stock market. Additionally, advanced US GDP for the third quarter will be crucial for market sentiment. Market participants believe that the American economy is in one soft landing phasewith GDP growth of 3% in the second quarter.
Another strong quarter would further reinforce expectations that the Federal Reserve will slow its easing cycle, which would likely push the dollar and stock markets higher. The world’s largest economy is expected to maintain growth of 3% in it third quartermatching the rhythm of the second.
Regarding the results, the technology giants such as Alphabet, Meta Platforms, Apple and Amazon will publish their quarterly resultswhich will offer valuable information on the evolution of the artificial intelligence.
ADVERTISINGWhat economic developments will attract attention in Asia-Pacific?
In the Asia-Pacific region, the decision of the Bank of Japan about the interest rates. The Bank of Japan raised official interest rates in March and July, aiming to support the yen and reduce import prices. Given the decline in Japanese inflation in recent months, the bank is expected to maintain interest rates this week, especially before the Japanese general elections and the US presidential elections.
Markets expect the Bank of Japan to raise rates again in December or January next year. The business activity of China in the manufacturing and service sectors will also be fundamental for global markets. China’s manufacturing PMI has contracted for five consecutive months through September, due to weak demand and low commodity prices. raw materials.
However, September’s decline was the mildest in the series, indicating a possible reply later. The manufacturing PMI is expected to return to expansion, while the non-manufacturing PMI is likely to continue growing this month.
Australia will release its third quarter inflation data, a key measure for the Reserve Bank of Australia (RBA) in deciding its interest rate policy. The RBA is the only central bank that has not yet initiated a rate cut in the global easing cycle due to the persistence of a inflation elevated. Therefore, the upcoming inflation data is very important for future policy decisions.
ADVERTISINGThe monthly CPI stood at 2.7% in September, which represents a sharp decrease compared to 3.5% in August. According to consensus forecasts, the annual inflation will cool down to 2,3% in the third quarter, which will likely encourage the RBA to start its easing cycle earlier than expected.
