Last week, the majority of stock markets experienced losses due to a continued surge in interest rates. Central bankers have been championing a prolonged period of higher interest rates, a message that has resonated strongly with investors. This has prompted a series of adjustments and revaluations of assets carrying risks.
To compound the market’s concerns, American job figures released last Friday failed to provide much relief. In the previous month, job growth reached 336,000, exceeding market expectations, which had been set at 170,000 jobs. The unemployment rate in September remained at 3.8 percent, the same as in August, contrary to economists’ expectations of a decrease to 3.7 percent. In addition, job growth for August was revised from 187,000 to 227,000, and July’s numbers were adjusted from 157,000 to 236,000.
These robust job figures prompted an upward tick in U.S. interest rates, approaching the yearly highs set earlier in the week. Consequently, the stock market faced increased pressure as investors pondered the likelihood of the Federal Reserve raising interest rates once more.
According to a report on Bloomberg, only 12 percent of the shares in the S&P 500 index are currently above their 50-day average. This represents the lowest percentage in over a year. In the past 18 months, such instances have often signalled a time for stock prices to rebound. Other indicators also suggest that the market is somewhat oversold and could see a short-term recovery, although this is far from guaranteed.
The decline in oil prices, attributing it to decreased gasoline demand in the U.S. Gasoline prices have fallen from record levels since June, and demand and supply have found equilibrium at lower levels. As a result, oil prices have regressed to their end-of-July levels. While this is favourable news for consumers, who will have more disposable income, it may translate to reduced profits for oil companies. It can be rapidly reverted due to situation in Middle East though.
Looking ahead, the upcoming week will mark the start of the business reporting season, with a macroeconomic focus on U.S. inflation.
Monday will be relatively quiet due to Columbus Day in the U.S., but stock exchanges will remain open while bond markets will be closed. In Germany, there will be updates on industrial production.
On Tuesday, attention will turn to Dutch household consumption, inflation, and industrial production figures. In the U.S., small business confidence will take center stage.
Wednesday will bring final inflation data for September in Germany and U.S. producer prices. Weekly mortgage applications will also be reported, and the Federal Reserve minutes will be scrutinized.
Thursday will see data on bankruptcies in the Netherlands, international trade statistics, and a focus on U.S. inflation. Additionally, weekly jobless claims and oil stock figures will be released in the U.S., and the OPEC monthly report will garner attention.
Toward the end of the week, China and France will release inflation data, while the eurozone will present industrial production figures. In the U.S., import prices and consumer confidence measured by the University of Michigan will be disclosed.
