Economy Spotlight : Key Events and What’s Next Oct 28 - Nov 3

Introduction:

In this week’s “Economy in Focus,” we’ll recap the key events from last week and look at the important developments this week that could impact the global economy.

With the U.S. election approaching, we’ll focus on key earnings reports, fundamental economic data, and important political and economic events, such as those in Japan.

Economy Spotlight : The Most Important Events Last week

The following are the most prominent events that happened in the major economies:

Financial markets. Main economies:

First. The American economy:

The US economy had a modest week of economic data but key speeches from Federal Reserve members were the focus.

Four policymakers supported additional rate cuts, describing them as “modest” and “gradual,” while stressing the need to closely monitor economic indicators.

Current data continues to suggest that the Fed needs more evidence of declining inflation and consumer spending.

.Jobless claims unexpectedly fell to around 227,000, against expectations of a rise, with analysts linking the drop to the fading impact of Hurricane Helene relief claims.

According to the Fed Watch pricing tool, the odds of a quarter-point rate cut rose to 95.1%, up from 90.4% last week, while expectations for a rate cut to remain at 4.75-5.00% fell.

Second. The European Economy:

Bloomberg analysts indicated the possibility of the European Central Bank cutting interest rates for the fourth time at its next meeting on December 17, by a quarter of a percentage point to reach 3.25% compared to the 4% rate that interest rates started this year, especially with the interest rates falling in their final reading to 1.7% compared to the previous reading of 1.8%.

Many observers indicated their concerns about the European economy slipping into recession, due to inflation falling from the target levels (2%) faster than expected.

The picture regarding inflation rates and the future of interest rates may become clearer on the 31st of this month, when the inflation reading (consumer price index) for October will be released, which is expected to rise from 1.7% to 1.9%.

Third. The Chinese Economy:

China’s economy is still showing weak signs of stabilization in the third quarter, with GDP growth falling to 4.6% from 4.7% in the second quarter.

That’s still prompting Chinese authorities to take stimulus measures, including cutting the benchmark lending rate by a quarter percentage point to 3.1% and a similar cut for the five-year loan to 3.6%. In addition, industrial profits turned negative for the first time, falling to -3.5% from 10.2% in February.

Fourth. Japan’s economy:

The Japanese week began with the House of Representatives elections, where the ruling Liberal Democratic Party lost its majority, winning only 215 of the 465 seats, far short of the 233 seats needed to control the chamber.

Despite the poor outcome of the elections for the economy as a whole, Japanese stock markets opened higher, which analysts interpreted as a result of the elections actually being over and the results being in, and given the inverse relationship between stock market performance and the weak Japanese yen.

The yen fell to a three-month low amid uncertainty over future interest rates.

The Bank of Japan is scheduled to meet on October 31, and is expected to keep interest rates at 0.25%. Analysts expect no rate hikes due to favorable inflation data, with core inflation in Tokyo falling to 1.8%, below the 2% target for the first time in five months.

Fifth. IMF Meetings:

Last week, the annual meetings of the International Monetary Fund and the World Bank Group for 2024 were held, from October 21 to 26 in Washington, DC. These meetings were dominated by talk about economic growth, global debt, and the US elections in general.

The meetings pointed to the risks of sovereign debt and their impact on the liquidity of poor countries, and the International Fund also lowered its growth forecast for this year and next.

The meetings also addressed the issue of electric cars, their impact on economies such as China, and their expected growth rates based on its remarkable progress in this industry.

Sixth. Precious metals and commodities:

Despite the rise in oil prices on a weekly basis, the end of last week witnessed geopolitical events that may call for optimism about calm, which may be one of the reasons for reducing the geopolitical risk premiums that led oil prices to hold at high levels since the beginning of this month.

On a weekly basis, oil prices rose by 2.7%, as US Texas Intermediate crude closed at $71 per barrel, while Brent crude closed at $76 per barrel.

As for precious metals, gold and silver achieved new historical price levels, thanks to geopolitical tensions and political uncertainty with the approach of the US elections, and the continued impact of the Federal Reserve’s interest rate cut for the first time in four years at its September meeting.

Gold reached a historical peak of $2,757 in the middle of last week, before closing at $2,747, with the decline attributed to recent US economic data that cast doubt on the Federal Reserve’s deep interest rate cuts.

Silver closed at $33.7, its highest level since 2012. The metal has benefited significantly from China’s measures to stimulate its economy, as China is the world’s largest importer, with about $4.2 billion in 2023.

Seventh. Performance of giant and anticipated companies:

Stock market indicators continued to be affected by the financial statements of related companies.

The most recent of which was last week's Tesla, whose owner Elon Musk indicated that sales will improve next year, which prompted the stock to rise very significantly from $213 to $267, raising its market value to exceed $860 billion.

Also, the financial markets will be on a date with the results of giant companies in bulk; as financial statements will be issued for five of the amazing seven companies, leaving only Nvidia's announcement date, which will be issued in the last third of next month.

On Tuesday, Alphabet's data will be issued, while on Wednesday, Microsoft and Meta's data will be issued, while on Thursday, Apple and Amazon's data will be issued, along with Intel's data.

Economy Spotlight . What are the markets waiting for next week:

Global markets will be waiting for the following economic data:

Tuesday 10-29-2024:

USA:

• Consumer Confidence Index for October, with expectations of a slight increase from 98.7 to 99.2.

• Job opportunities for September, with expectations of a decrease from 8.040 million jobs to 7.920 million jobs.

Japan:

• Unemployment rate for September, with expectations of stability at 2.5%.

Sweden:

• GDP for September, for the third quarter.

• Retail sales.

Wednesday 10-30-2024:

USA:

• Report on the change in private sector non-agricultural jobs, with expectations of a decrease from 143 thousand to 101 thousand jobs.

• GDP for the third quarter, with expectations of stability at 3%.

• Crude oil inventory.

UK:

• Autumn Forecast: Also known as the "mini-budget" in which the British Parliament publishes its economic forecasts.

Switzerland:

• Swiss National Bank press conference.

Euro:

• GDP for the third quarter, with expectations of an increase from 0.6% to 0.8%.

Thursday 10-31-2024:

Japan:

• Industrial production for September, with expectations of a significant increase.

• Retail sales.

• The Bank of Japan's decision on interest rates, with expectations of no change and remaining at 0.25%.

China:

• Manufacturing Purchasing Managers' Index for October.

Euro:

• The monthly report issued by the European Central Bank.

• The inflation index, the consumer price index for October, with expectations of an increase from 1.7% to 1.9%.

America:

• The inflation index, represented by the core personal consumption expenditures price index.

• The unemployment claims rate.

Friday 11-1-2024

USA:

• Average wages in October time.

• Unemployment rate expected to hold steady at 4.1%.

• ISM Manufacturing PMI expected to rise to 47.6 from 47.2.

• Manufacturing PMI expected to rise to 47.8 from 47.3.

Switzerland:

• Consumer Price Index.