Stocks held previous week’s strong gains – inflation data due

Stocks held previous week’s strong gains – inflation data due

Global stock-markets were mixed last week but US equities had a late rally on Friday which has pulled Europe higher today (Monday). Generally though there was a consolidation of the previous week’s strong gains which is encouraging.

Federal Reserve Chair Jerome Powell spoke at a meeting of the International Monetary Fund (IMF) last week. He said it was still too early for the central bank to announce the end of its series of interest rate hikes. Although he did not present a case for further rate increases, he highlighted that the Federal Open Market Committee (FOMC) is committed to a monetary policy stance that will bring inflation down to 2 percent over the long term. Powell expressed caution about prematurely claiming success and stated that officials will closely monitor economic conditions to avoid the risk of raising rates excessively. He also emphasised the importance of not being swayed by short-term positive data but instead taking a careful approach. US stocks sold-off on Thursday after Powell’s comments but recovered strongly on Friday to end the week on a high.

The UK is estimated to have shown no growth in the third quarter 2023 just managing to avoid a recession according to data from the ONS. At an annual rate, GDP grew at 0.6% in Q3, slightly exceeding market expectations.

Market focus this week will be on the release of US inflation data on Tuesday and how this might have an impact on the Fed’s interest rate policy.

UK inflation data is also due this week and Governor Andrew Bailey has signalled a fall below 5%. An upside surprise is not out of the question though and Wednesday’s release will be closely monitored.

UK Market Chart 10th November 2023

US Market Chart 10th November 2023

US Risk Barometer 10th November 2023

Europe Risk Barometer 10th November 2023

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