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This week in three words: Fed, jobs, and global markets

This week, up until Wednesday afternoon, US time, the focus is on the Federal Reserve (Fed) and the US job market, as the end-of-month/start-of-month data crunch begins for late October and early November. However, the escalated fighting in Gaza poses a constant threat to market stability and millions of lives, causing fluctuations in oil and gold prices, as well as shares and bond rates, especially in the US.

Other central banks in the UK and Japan are also convening this week, expected to follow the Fed’s lead and maintain their current policies.

In Europe, an early estimate of economic growth will be released, and when compared to the US, EU data is unlikely to paint a rosy picture. Additionally, monthly surveys on manufacturing and service sector activities, including key Chinese data, are set to begin.

Australia will release end-of-month retail data for September and the September quarter, followed by start-of-month figures on house prices, housing approvals, finance, and trade. According to AMP’s chief economist, Shane Oliver, retail sales likely increased by 0.1% in September, continuing a weak trend seen over the past 10 months. The quarterly figures, to be released on Friday, are expected to show a 0.8% decline, one of the steepest drops in three months outside of pandemic and GFC-related declines. Additionally, house prices for October are predicted to rise by 0.9%, housing finance is expected to rebound slightly, while building approvals data appears weak, and the trade surplus for September is projected to increase to around $11.5 billion, up from just over $9.6 billion in August, both to be released on Thursday.

In the corporate and markets sector, there will be updates on the battle for control of Azure Minerals, BHP’s annual meeting in Adelaide on Wednesday, and Macquarie Group’s half-year profit figures on Friday. In the US, Atlassian will release its latest quarterly figures. Watch out for standout quarterly production and sales data from IGO and Mineral Resources, both Perth-based companies.

The US will be particularly active, with the Fed meeting, October’s job data (forecasted at 170,000 new jobs with a 3.8% jobless rate), and US car sales for October. The third-quarter earnings season is also halfway through, with around 160 S&P 500 companies set to report.

On Tuesday, Eurozone GDP growth for the September quarter is expected to be zero, with just a 0.2% year-on-year increase, while the first estimate of October CPI inflation is forecasted to slow to 3.1% year-on-year. Friday will see the release of unemployment data for September, expected to remain at 6.4%. These factors help explain why the European Central Bank maintained interest rates at last week’s meeting.

The Bank of Japan is expected to keep its policy rate steady at -0.1%, with the possibility of further relaxing its yield curve control and revising up near-term growth and inflation forecasts. Tuesday will also see the release of jobs and retail sales data, expected to remain solid, but with soft industrial production.

On Thursday, the Bank of England is likely to maintain its key rate steady at 5.25%.

Chinese business conditions for October, to be released on Tuesday and Wednesday, are expected to remain relatively subdued, with slight expansion, particularly in manufacturing, driven by stronger domestic demand. However, soft export orders and employment readings are still anticipated, according to Moody’s economists.

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