It will be a busy week in the global markets ahead, with three central banks, including the US Fed, the Bank of Japan, and the Bank of England, to decide on their interest rates. Despite upside inflationary pressure, all three banks are expected to keep their policy rates on hold amid intensifying geopolitical tensions. In the US, the non-farm payroll remains a focus for clues of the country’s labour markets. However, Apple may steal the spotlight, which will be the last mega-cap tech company reporting its quarterly earnings this week. Consensus calls for another year-on-year decline in its revenue due to a slowdown in iPhone sales.
Elsewhere, China will report its October manufacturing and services PMIs, which can have a major impact on Asian markets and commodity prices. The recent Chinese data signalled an improvement in the country’s economic recovery as the downside momentum of its stock markets eased, thanks to Beijing’s stimulus measures. Hence, commodity currencies, such as the Australian dollar and the New Zealand dollar, may benefit from more positive economic data from the country.
Wall Street trajectory
Wall Street extended losses for the second straight week as risk-off continued to weigh on investment sentiment due to intensifying Hamas-Israel conflicts. Technology stocks were particularly hit by the macro headwinds and mixed quarterly earnings results, sending the Nasdaq down 10% from its year-high in July, entering a correction territory. Mega-cap tech stocks, including Alphabet, Meta Platforms, Amazon, and Apple, fell between 3% and 10% for the week. At the same time, surprisingly strong US third-quarter GDP gives the Fed impetus to keep the interest rates higher for longer as the 10-year US Treasury yields stayed near a 16-year high.
What are we watching?
- Gold continues soaring: Gold has surged since the war started as it is seen as a haven asset to hedge market risks. Spot gold price topped 2,000 for the first time since May. The momentum may take it to hit an all-time high of above 2,070.
- Crude oil retreats: The WTI and Brent futures snapped a two-week winning streak as markets reassessed the geopolitical risks in the Middle East. However, energy prices still face upside pressure as Israel expanded ground operations in the Gaza Strip.
- Stock markets turned on defensive mode: Investment funds rotated to defensive sectors, such as Utilities and Consumer Staples in the equity markets. The trends can be found in both the US and Australian stock markets. Materials stocks also outperformed due to a surge in metal prices.
Economic Calendar (30 Oct – 4 Nov )
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