This week, markets will focus on upcoming economic indicators such as euro zone inflation, US non-farm payrolls, and Chinese business activity data. This data is critical for investors assessing the trajectory of the global economy and the potential direction of central bank interest rate policy.
advertisementGlobal markets are likely to end September on a positive note as central banks begin monetary easing. Investors will continue to monitor key data from major countries this week, including the Eurozone Consumer Price Index (CPI), US non-farm employment data, and business activity in China's manufacturing and services sectors.
Europe
The Eurozone's consumer price index (CPI) preliminary figures for September are a key focus for the region. Inflation slowed to 2.2% year-on-year in August, the slowest growth rate since July 2021.
However, core inflation remains at 2.8%. Consensus predicts that the overall CPI will fall further to 1.9% and the core CPI to 2.7%.
The European Central Bank (ECB) cut interest rates for the second time this year in September, but reiterated that it was “not committing in advance to any particular interest rate path.” Therefore, if inflation cools further, expectations for further rate cuts before the end of the year will increase significantly.
Markets are also keeping an eye on ECB President Christine Lagarde's speech to the European Parliament on Monday. Lagarde is expected to discuss monetary policy and the regional economic outlook, and provide insight into the central bank's future interest rate trajectory.
Additionally, S&P Global will release final manufacturing Purchasing Managers Index (PMI) data for France and Germany on Tuesday.
Preliminary data shows a sharp deterioration in business activity in the private sector in both countries, raising the possibility that the ECB will cut interest rates even further.
Germany's preliminary CPI figures for September are also a key indicator, with data due to be released on Monday. Consumer prices in August fell 0.1% from the previous month and rose 1.9% from the same month last year, slower than expected.
The annual inflation rate was the lowest since March 2021. The data is seen as a positive sign that could persuade the ECB to continue its easing cycle, but it also suggests a decline in purchasing power due to worsening economic conditions.
The consensus forecast is for Germany's CPI to rise 0.1% month-on-month in September.
In the UK, the final gross domestic product (GDP) for the second quarter and the manufacturing and services PMI for September will be finalized.
Preliminary figures showed that business activity continued to expand in both manufacturing and services, while GDP grew by 0.6% quarter-on-quarter.
Sterling is expected to continue to appreciate on a solid economic outlook.
US
September's non-farm employment statistics are expected to be a major focus of financial markets. Recent data shows the U.S. labor market is cooling faster than expected, prompting the Fed to begin an easing cycle with a 0.5% interest rate cut.
Nonfarm payrolls increased by 142,000 people in July, and the unemployment rate fell slightly to 4.2%. However, the increase in part-time employment signals a rise in the overall unemployment rate, which has been revised downward significantly in recent months.
advertisementThe Fed expects the unemployment rate to reach 4.4% by the end of the year. The forecast for August is for 144,000 new jobs and a stable unemployment rate of 4.2%.
Also keep an eye on the ISM Manufacturing PMI. U.S. factory activity has contracted for 21 straight months, making August one of the weakest months of 2024.
If the indicators remain weak, the Fed could be forced to continue cutting rates. The September PMI is expected to remain in contraction territory.
Asia Pacific
In the Asia-Pacific region, China's National Bureau of Statistics (NBS) is scheduled to release September manufacturing and non-manufacturing PMIs on Monday.
advertisementOn the same day, S&P Global will release the Caixin Manufacturing and Services PMI, data comparable to the private sector.
According to NBS data, business activity in the manufacturing industry contracted for the fourth consecutive month in August, and consensus forecasts suggest that the contraction will continue in September.
However, the private sector has expanded throughout the year, according to Caixin data.
Last week, China announced a significant economic stimulus package, boosting global stock markets, particularly in Asia and Europe.
advertisementHowever, future data will not yet reflect the impact of these measures.
