London, Monday, 26 September 2022
The US will focus on multiple lectures by Fed officials as well as the publication of the PCE price index and personal income and spending data. Investors in Europe will be monitoring the Ifo Business Climate Index as well as the flash inflation rates for the Euro Area, which includes Germany, Spain, France, and Italy. The manufacturing PMI data from China and Japan will also be closely watched.
Following a significant stock market decline on Friday, multiple speeches by Fed officials will be eagerly scrutinised for additional cues on the direction of the central bank's rate-hike programme. Investors will also pay special attention to the preferred personal consumption expenditure inflation rate and personal income and spending data from the Federal Reserve, which may provide clues about how American consumers would act in the face of exorbitant inflation. Durable goods orders and sales of new homes are other significant data points.
According to recent estimates, harmonised inflation in Germany and the Euro Area advanced to a new record high in September. In addition, consumer and business confidence in Germany are predicted to decline once more in September, with the Ifo business climate index falling to a 27-month low and the Gfk consumer barometer forecast to strike a new record low. The Euro Area Business Survey and Unemployment Rate, Germany's Unemployment Statistics and Retail Sales, Switzerland's KOF Leading Indicators and Retail Trade, and Turkey's Foreign Trade and Business Confidence are some of the other data that will be released.
Following recent hawkish hints from ECB officials, markets will be keenly awaiting President Lagarde's presentation to the European Parliament on Monday. On the political front, Italy will hold national general elections on Sunday. According to polls, a center-right coalition led by Giorgia Meloni of the Brothers of Italy will win.
Investors will continue to focus on the pound in the United Kingdom. Following the government's announcement of various tax cuts on Friday, the pound fell to its lowest level since 1985. If the depreciation persists, the Bank of England may be forced to take some type of action, such as an unexpected rate hike. Furthermore, the release of the Bank of England's monetary indicators and Q2 current account will show that the British economy is entering a recession.
In Asia, the Chinese Manufacturing PMI statistics for September will be closely watched to determine how the introduction of more stimulus helped factory activity after Covid lockdowns and power outages caused the sector to experience a steep contraction in August. Consumer confidence and flash PMIs for September, as well as the unemployment rate, retail sales, and industrial production for August, are among the significant data releases in Japan. Investors also anticipate details from the BoJ's September meeting minutes regarding the bank's choice to intervene in the yen.
The Reserve Bank of India is anticipated to increase its benchmark repo rate by 50 basis points to 5.9% in order to stabilise the rupee, which has fallen to a historic low. India's current account balance for the second quarter will also be monitored. Consumer and business confidence data from South Korea and Thai data on international commerce are two more noteworthy releases.
(Research and report by: The Decision Maker - Finance editors)