This week, investors are keeping an eye on various factors that could impact the markets. In the US, political developments and geopolitical tensions are still in focus. Economic indicators such as EU inflation, US GDP, and the RBNZ’s rate decision are key points of interest for regional markets.
Last week, Wall Street saw a recovery in bullish trends driven by the Trump Trade. However, rising geopolitical tensions led to increases in gold, crude oil, the US dollar, and the Japanese yen. This pressured the euro, European equities, and Chinese markets. Bitcoin also surged close to $100,000, reaching above $99,500. Market attention remains on US politics as the President-elect forms his administration and ongoing tensions between Ukraine and Russia.
On the economic front, the eurozone is scheduled to release flash Consumer Prices Indices (CPIs) for November. These figures will influence the European Central Bank’s (ECB) future interest rate decisions. In the US, focus will be on the second estimate for third-quarter GDP, Personal Consumption Expenditures (PCE), and the FOMC meeting minutes. Additionally, investors will be monitoring the Reserve Bank of New Zealand’s (RBNZ) rate decision and Australia’s monthly inflation data.
In the eurozone, inflation has been rising, with October data showing a 2% increase from the previous month’s 1.7%. This growth was primarily driven by volatile energy prices. Germany’s CPI rose to 2%, with services inflation playing a significant role. France and Spain also experienced slight increases in inflation. Consensus suggests that price pressures may continue to rise in November, with the harmonized CPI in the eurozone expected to reach 2.3% and core inflation forecasted at 2.8%. Rising inflation could lead the ECB to take a cautious approach to rate cuts.
The US will focus on the preliminary GDP data, which is expected to align with the initial estimate of 2.8%. Additionally, the PCE, a key inflation indicator, is forecasted to show a 0.3% monthly increase in core PCE for October. This could reinforce expectations for slower rate cuts by the Fed.
In the Asia-Pacific region, the RBNZ is anticipated to cut the official cash rate by at least 0.5% following a jumbo rate cut in October. New Zealand’s economy is expected to face a technical recession in the third quarter, prompting the bank to continue supporting the economy through rate cuts. Australia is set to release monthly CPI data for October, with headline inflation expected to rise to 2.5% year on year. This could impact expectations for the RBA’s monetary policy decisions.
Overall, global markets are closely watching these key economic indicators and geopolitical developments to assess the direction of financial markets in the coming weeks.
