Wednesday, November 29, 2023
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Top 5 things to watch in markets in the week ahead

 
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Investing.com — In the holiday-shortened week ahead investors will be looking to the minutes of the Federal Reserve’s latest meeting for any fresh insights on the future path of interest rates. Retailers are preparing for what they hope will be another bumper holiday shopping season. Nvidia is the last megacap company to report earnings and oil prices look set to remain volatile. Here’s what you need to know to start your week.

  1. Fed minutes

The Fed is to publish the minutes of its Oct. 31-Nov. 1 meeting on Tuesday, a day earlier than usual, due to this week’s Thanksgiving holiday.

Recent indications that inflation is cooling have fueled hopes that the U.S. central bank is done with hiking rates and investors will be combing through the minutes for clues on where policymakers are leaning.

On Friday Vice Chair for Supervision Michael Barr said he believes the Fed is at or near the peak of interest rate hikes, but San Francisco Fed chief Mary Daly and Boston Fed President Susan Collins highlighted the need for more evidence of cooling inflation.

On the economic data front, figures on existing home sales are due out on Tuesday, followed a day later by the weekly government figures on initial jobless claims and October data on durable goods orders.

  1. Black Friday

U.S. retailers are gearing up for Black Friday, marking the start of the crucial holiday shopping season that follows Thanksgiving at a time when investors are questioning whether the consumer-driven U.S. economy can remain resilient.

This year’s Black Friday comes against a backdrop of elevated interest rates and inflation that, while easing, remains above the Fed’s 2% target.

Data last week showed that U.S. retail sales fell for the first time in seven months in October, pointing to slowing demand, although the decline was smaller than expected.

Retailers have already warned that this year’s holiday season will be less robust than in previous years. Walmart (NYSE: WMT) said Thursday that consumers are being more cautious with spending as the holiday season gets underway, even as the largest U.S. retailer raised its forecast for sales and profit for the year.

  1. Equities optimism

Investor optimism on equities has grown over the last few weeks, with markets rebounding from a months-long drop that ran from August through much of October. Treasury yields, whose steady rise over the last few months had weighed on stocks, have rapidly retreated amid hopes the Fed is finished raising interest rates.

Last week saw the S&P 500, the Nasdaq and the Dow rack up their third straight week of gains. For the S&P and the Dow it was the longest weekly winning streak since July. For the Nasdaq it was the longest weekly advance since June.

This week investors will be turning their attention on chip company Nvidia (NASDAQ: NVDA), which releases its latest earnings report on Tuesday. It is the last of the results in the earnings season from the Magnificent Seven megacap companies, whose massive share gains this year have led equity indexes higher.      

  1. Oil prices

Oil prices jumped more than 4% on Friday, rebounding from a four-month low hit in the previous session, as investors who had taken short positions took profits and while U.S. sanctions on some Russian oil shippers lent support.

Still, both the Brent and crude oil benchmarks ended the week more than 1% lower, their fourth straight weekly decline, mostly weighed down by a rise in U.S. crude inventories and sustained record high production.

China’s deepening property crisis and slowing industrial growth also weighed.

With Brent below $80, many analysts expect the Organization of the Petroleum Exporting Countries and its allies to extend output cuts into 2024 when the group meets later this month.

  1. Eurozone data

The Eurozone is to publish purchasing manager indexes data for November on Thursday, with economists not expecting any meaningful pickup in activity. The bloc is also to release data on consumer confidence on Wednesday and the closely watched German Ifo business climate index is due out on Friday.

The European Central Bank is to publish its latest financial stability review on Wednesday, followed a day later by the minutes of its October policy meeting.

ECB President Christine Lagarde is to make an appearance in Berlin on Tuesday and will speak again at an event in Frankfurt on Friday, while several other ECB officials are also due to make appearances during the week.

–Reuters contributed to this report

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