Top 5 things to watch in the market next week By

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By Noreen Burke – After a week of shaky financial markets as central banks and governments stepped up their fight against inflation, investors braced themselves for fresh volatility in the coming week. Several Federal Reserve officials have yet to speak, signaling a third straight 75 basis point hike. The highlight of the US economic calendar will be Friday’s personal income and spending data, which includes the Fed’s preferred measure of inflation. In the Eurozone, Friday’s inflation data could put pressure on the European Central Bank. Before that, ECB President Christine Lagarde is due to testify before lawmakers in Brussels on Monday, while Italy’s election results will be closely watched on Sunday. The yen remains in focus after the Bank of Japan intervened in the foreign exchange market. Meanwhile, China’s PMI data on Friday will provide insight into the health of the world’s number two economy. Here’s what you need to know to start your week.

  1. Fedspeak, American data

With St. Louis Fed President James, Cleveland Fed President Loretta, Chicago Fed President Charles Evans, Atlanta Fed President Rafael Bostick and Fed Vice Chairman Lael all scheduled to speak later in the week, investors are watching for signs that a fourth straight 75 isn’t the case. bps is on the cards in November.

The economic calendar provides reports on , , with information and on .

The highlight of the economic calendar will be data from August and Friday, which will include the personal consumption expenditures price index, the Fed’s preferred measure of inflation.

Economists are expecting annual increases to moderate as fuel costs have slowed recently, but growth that excludes food and energy is expected.

  1. Selling shares

Wall Street’s major indexes suffered their biggest losses last week, down 5.03% — the second straight week they fell more than 5% — ending at 4.77% and shedding 4%.

The Dow narrowly avoided joining the S&P 500 and Nasdaq in the bear market.

A shift in bond markets added pressure on stocks as investors adjusted their portfolios to continued inflation and rising interest rates. Investors lost control after expectations that high US prices would last until 2023.

While recent data indicate that the US economy is relatively strong, investors are worried that the Fed’s tightening will lead to a recession.

Ed Moya, senior market analyst at OANDA, told Reuters on Friday: “We’re making everyone reassess how far the Fed will go, and that’s worrisome for the economy.”

“It’s becoming a starting point that the economy is going to have a hard landing, and that’s a terrible environment for U.S. stocks.”

In addition to tightening financial conditions around the world, market sentiment has been hit hard by a range of issues, including the Ukraine conflict, Europe’s energy crisis and China’s COVID-19 outbreak.

  1. Eurozone CPI

The euro zone is due to release September data on Friday, with economists expecting the headline pace of inflation to rise to a new record high of 9.6%, keeping pressure on the ECB, which is grappling with how much to raise interest rates. The looming recession.

Before that, ECB President Christine Lagarde is due to testify before the Economic and Monetary Affairs Committee in Brussels on Monday, where she will face questions about how the central bank is doing in the fight against inflation. failure.

Investors will also be watching Sunday’s results for what is expected to be the country’s most right-wing government since World War II.

European Union leaders, the desire to maintain unity after Russia’s invasion of Ukraine, are concerned about Italy being a more unpredictable partner, the financial markets are concerned about the new government’s ability to manage a debt burden of about 150% of GDP.

  1. Yen intervention

Japanese authorities finally had enough weakness in the yen on Thursday for the first time since 1998.

Following the move, it posted an initial weekly gain of 0.3 percent against the dollar.

But the dollar is up more than 20% this year and the yen has maintained the Bank of Japan’s commitment to ultra-low interest rates, while the Fed appears poised to continue raising rates at a higher rate until inflation is confirmed.

So the issue of a strong dollar remains. By pushing the dollar alongside neighbors China and Korea, Japan could find itself fighting fundamentals, the market and the Fed.

He is due to give a speech on Monday, which is expected to provide further insights into Japan’s decision to intervene.

  1. China PMI

China is set to release data on Friday that suggest the economic recovery that began in September has continued.

The latest economic data pointed to a recovery in August, with faster-than-expected growth in factory output and retail sales, showing a weak recovery, but a deepening property slump weighed on the outlook.

In few signs that China will soon ease its zero-covid policy, some analysts expect the world’s second-largest economy to grow by just 3% this year, the slowest since 1976, excluding the 2.2% expansion during the first COVID-19 hit in 2020. .

China has announced broad economic support measures since late May, but a sharp decline against the US dollar has complicated the case for looser funding.

— Reuters contributed to this report

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