This week, markets will focus on upcoming economic data, including eurozone inflation, US non-farm payrolls, and China’s business activity figures. This data will be critical for investors assessing the global economic trajectory and the potential direction of central bank rate policies.
Global markets are likely to end September on a positive note as central banks begin easing monetary policies. Investors will continue to monitor key data from major economies this week, including the eurozone Consumer Price Index (CPI), US non-farm payroll data, and business activity in China’s manufacturing and services sectors.
Europe
The eurozone’s flash Consumer Price Index (CPI) for September is a key focus for the region. Inflation cooled to 2.2% year on year in August, marking the slowest increase since July 2021.
However, core inflation remains stubborn at 2.8%. Consensus suggests that headline CPI will further cool to 1.9%, while core CPI is expected to ease to 2.7%.
The European Central Bank (ECB) delivered its second rate cut of the year in September but reiterated that it “is not pre-committing to a particular rate path.” Thus, further cooling inflation would significantly strengthen expectations for additional rate cuts before year-end.
Markets will also focus on ECB President Christine Lagarde’s speech at the European Parliament on Monday. President Lagarde is expected to discuss monetary policy and the economic outlook for the region, offering insights into the bank’s future rate trajectory.
Additionally, S&P Global is set to release the final manufacturing Purchasing Manager Index (PMI) data for France and Germany on Tuesday.
Flash data indicated that business activity in the private sectors of both countries had sharply deteriorated, increasing the likelihood of deeper ECB rate cuts.
Germany’s preliminary CPI for September is another critical gauge, with the data set to be unveiled on Monday. In August, consumer prices decreased by 0.1% month on month and rose by 1.9% year on year, cooler than expected.
The annual inflation rate was the lowest since March 2021. While this data is seen as a positive sign that could convince the ECB to continue its easing cycle, it also suggests weakening spending power amid deteriorating economic conditions.
Consensus forecasts expect Germany’s CPI to increase by 0.1% in September compared to the previous month.
In the UK, final Gross Domestic Product (GDP) data for the second quarter, along with final manufacturing and services PMI data for September, will be confirmed.
Preliminary readings showed that GDP grew by 0.6% quarter on quarter, while business activity continued to expand in both the manufacturing and services sectors.
The resilient economic outlook is expected to continue bolstering the Pound.
The US
The non-farm payroll report for September is set to be a major focus for financial markets. Recent data shows the US labour market is cooling faster than anticipated, leading the Fed to kick off its easing cycle with a 0.5% rate cut.
July saw non-farm payrolls increase by 142,000, while unemployment edged down to 4.2%. However, the rise in part-time jobs hints at a higher jobless rate overall, with big downward revisions in recent months.
The Fed expects unemployment to hit 4.4% by year-end. Forecasts for August point to 144,000 new jobs and steady unemployment at 4.2%.
Keep an eye on the ISM Manufacturing PMI too. US factory activity has been contracting for 21 straight months, and August was one of the weakest in 2024.
If the data stays soft, it could push the Fed to continue its rate cuts. September’s PMI is expected to remain in contraction territory.
Asia-Pacific
In the Asia-Pacific region, the National Bureau of Statistics of China (NBS) is set to release manufacturing and non-manufacturing PMIs for September on Monday.
S&P Global will also publish its Caixin Manufacturing and Services PMIs on the same day, which represent the equivalent data for the private sector.
NBS data indicated that business activity in the manufacturing sector contracted for the fourth consecutive month in August, with consensus forecasts suggesting it will continue contracting in September.
However, Caixin data has shown that the private sector has been expanding throughout the year.
Last week, China announced a significant stimulus package that boosted global stock markets, particularly in Asia and Europe.
However, the forthcoming data will not yet reflect the impact of these measures.