Thoughts For the Week Ahead
The Week That Was
On Friday, Wall Street saw a robust uptick, driven predominantly by gains in major equities, as traders and investors digested the latest job figures. The recent report revealed that US payrolls witnessed their most substantial growth in eight months during September, indicating a bustling labour market. However, wage growth lagged behind. Despite an initial dip of 270 points, the Dow Jones rebounded to end 287 points up. Concurrently, the S&P 500 and the Nasdaq climbed 1.2% and 1.6%, respectively. Leading the charge were technology giants: Microsoft (up 2.5%), Nvidia (up 2.4%), Apple (up 1.5%), Meta (up 3.5%), and Alphabet (up 1.8%).
The automotive sector also saw an uptick, with GM and Ford registering gains of 1.9% and 3.2% after the UAW (United Auto Workers) confirmed there would be no strikes in the forthcoming week.
In contrast, Exxon Mobil slipped by 1.6% on news of its impending acquisition of Pioneer Natural Resources, a move that propelled Pioneer's shares up by 10.5%.
Overall, the week concluded with the Dow slightly up, the S&P 500 advancing 0.6%, and the Nasdaq gaining 1.3%.
On Friday, the JSE All Share Index rallied, closing up by 0.6% at 71 657, continuing its momentum from the prior day. The uplift was primarily attributed to strong performances by Karoo (+3.7%), Spar Group (+3.6%), Kumba Iron Ore (+3.6%), Resilient Reit (+3.5%), and Impala Platinum (+3.4%).
As for local sentiments, South African traders and investors are keenly anticipating this week's domestic mining and manufacturing statistics to gauge the nation's economic pulse.
Reflecting on the week's overall performance, the JSE receded by 1%, marking its third successive weekly dip.
The Week Ahead
In the US, attention turns to the September inflation report. The CPI is projected to have climbed 0.3% last month, down from August's 0.6% hike. The core index is also predicted to rise by 0.3%. The annual headline inflation rate may moderate to 3.6%. Moreover, the week will spotlight the FOMC minutes, US Fed officials' addresses, Michigan Consumer Sentiment, producer inflation figures, and the government's monthly budgetary statement.
The coming week also ushers in the Q3 earnings season, featuring insights from Citigroup, JPMorgan Chase, Wells Fargo, BlackRock, UnitedHealth Group, PepsiCo, and Delta Air Lines.
In Europe, the ECB's monetary policy meeting accounts are due on Thursday. The Euro Area's industrial production might show a mild resurgence.
In the UK, the ONS's monthly GDP data is projected to indicate growth in August. However, declines are anticipated in industrial and manufacturing outputs. Investors will also track foreign trade figures, construction output, and the BRC retail sales monitor.
In Asia, as Chinese financial and commodity markets reopen, the spotlight will fall on foreign trade numbers, M2 Money supply, New Yuan loans, and September's CPI figures.
Japan's focus will be on the Reuters Tankan index for October and August's current account data.
Key Themes for the Week Ahead
US Inflation Data
This week, the US is set to unveil its eagerly awaited consumer and producer price index data for September, as traders and investors evaluate the implications of the Fed's stance on maintaining elevated interest rates.
The CPI report for August highlighted the swiftest rise in 14 months, propelled by a spike in gasoline prices. However, when omitting food and fuel, core inflation advanced at its most subdued rate in almost two years.
Recent job figures from Friday revealed a more significant than anticipated boost in nonfarm payrolls for the past month. Coupled with decelerating wage growth, this could indicate a prolonged stringent monetary policy.
Should the inflation data be pronounced, it could bolster the Fed's assertion that interest rates ought to be maintained at a higher level over an extended period. While the consensus anticipates the Fed to keep rates unchanged in its 31 October- 1 November assembly, a segment of market participants speculate a potential rate hike.
US Fed Minutes
The US central bank is slated to release the minutes from its September meeting this Wednesday. Market enthusiasts will be keenly scanning for indications on whether policymakers are contemplating another rate increase by year's end.
Throughout the week, market participants will also have the opportunity to gain insights from multiple Fed officials. This lineup includes Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari, Boston Fed President Susan Collins, Dallas Fed President Lorie Logan, as well as Vice Chair Philip Jefferson and Governor Christopher Waller.
US Q3 earnings season kick-off
The third quarter earnings season is set to kick off with declarations from several prominent banks, as Wall Street traders and investors anxiously seek triggers to rejuvenate stocks amidst rising bond yields.
JPMorgan, Citigroup, and Wells Fargo are all scheduled to announce their results before Friday's market opening. Market participants will be keenly observing the repercussions of escalated rates on aspects ranging from loan demand to shifts in consumer behaviour.
Among others, snacks and beverages behemoth PepsiCo will report on Tuesday, followed by Delta Air Lines on Thursday, and insurance major UnitedHealth Group on Friday.
The earnings season holds the potential to chart the imminent trajectory for equities. Notably, the S&P 500 retains a 10% uptick for the year, even in the wake of its recent downturn.
Last week, oil prices experienced their most significant weekly drop since March. This was prompted by an additional partial relaxation of Russia's fuel export restrictions, exacerbating concerns about demand in light of broader economic challenges.
By Friday's close, Brent futures rose by 51 cents, settling at $84.58 per barrel, while US West Texas Intermediate crude futures increased by 48 cents, finishing at $82.79.
Over the week, Brent saw a dip of approximately 11%, while WTI registered a decline of more than 8%. These declines stemmed from apprehensions that sustained high-interest rates might curtail global growth and suppress fuel demand. This is in spite of supply constraints imposed by both Saudi Arabia and Russia, who affirmed their commitment to extending supply cuts until the year's end.
This week may see oil prices influenced by mounting geopolitical tensions in the Middle East.
IMF and World Bank Meetings
Global financial leaders and central bankers are converging in Marrakesh, Morocco, for the yearly gatherings of the International Monetary Fund (IMF) and the World Bank.
These discussions are set against a backdrop of concerns about balancing inflation management without pushing significant economies to the brink.
Beyond numerous presentations by central bankers and policymakers, the spotlight will also be on the IMF’s World Economic Outlook, slated for release on
Tuesday, which will provide updated forecasts.
South Africa News
The Judicial Service Commission's (JSC) inability to fill open positions in the Supreme Court of Appeal (SCA) might deter lawyers from considering judgeship applications.
The national chairperson of the African National Congress (ANC), Gwede Mantashe, expressed unease over the country's situation, describing it as a "passive democracy." Mantashe emphasised that the ANC's most significant oversight was permitting South Africans to evolve into passive citizens.
Electricity Minister Kgosientsho Ramokgopa stated that there will be a substantial reduction in load-shedding in the upcoming months, with plans to completely eliminate it by 2024.
In the upcoming economic calendar for this week, several significant events are scheduled to take place.