Marketmind: Don’t get carried away

1 min read
People pass by an electronic screen showing Japan's Nikkei share price index inside a conference hall in Tokyo

A look at the day ahead in European and global markets from Anshuman Daga

Markets have got all excited after last week’s rip-roaring rally in global equities, a big tumble in U.S. Treasury yields and a bruising sell-off in the mighty dollar.

But don’t pop the champagne just yet.

Federal Reserve Gov. Christopher Waller said on Sunday that the Fed may consider slowing the pace of rate increases at its next meeting but that should not be seen as a “softening” of its battle against inflation.

While U.S. consumer prices rose less than expected in October, pushing the annual increase below 8% for the first time in eight months, Waller said the markets shouldn’t get carried away over just one “data point.”

The comments tempered gains in Asian equity markets on Monday, though Hong Kong and Chinese stocks outperformed as China fine-tuned COVID-19 control measures and regulators ordered more financing support for the beleaguered real estate sector.

And days before the announcement of a budget plan, British Finance Minister Jeremy Hunt said he will set out tax rises and spending cuts to show Britain can fix its public finances and restore its economic credibility.

At least the sporting world brought good news for England after Captain Ben Stokes held his nerve with an unbeaten half-century on Sunday, helping England claim their second Twenty20 World Cup title with a five-wicket win over Pakistan.

This week, U.S. retail sales will dominate the data calendar, while markets will also pay attention to euro zone flash Q3 GDP estimates.

As the G20 summit kicks off in the Indonesian island of Bali on Tuesday, U.S. President Joe Biden is set to meet Chinese leader Xi Jinping in person for the first time since taking office, with U.S. concerns over Taiwan, Russia’s war in Ukraine and North Korea’s nuclear ambitions on top of his agenda.

In the crypto world, after Friday’s shocking collapse of cryptocurrency exchange FTX, Bahamas authorities said they were scrutinising the demise of the exchange, co-founded by 30-year-old Sam Bankman-Fried.

And finally, on the European corporate front, German military equipment manufacturer Rheinmetall agreed to acquire Spanish explosives and ammunition maker Expal Systems for an enterprise value of 1.2 billion euros.

Key developments that could influence markets on Monday:

Economic data: Euro zone Sep inflation final

Biden-Xi meeting

G20 leaders summit to Nov. 16th

Biden-Xi meeting

Fed’s Brainard speaks

(Reporting by Anshuman Daga; Editing by Ana Nicolaci da Costa)