​ ​US

Disappointing economic data translated into market expectations of an earlier Fed pivot, propelling the market’s rebound from the recent bottom. US equities posted a gain over the past 5 days ending Thursday, with the 3 major indices up by 2.40-3.13%. In response to the market optimism, Fed members have voiced out their disagreement. New York Fed President John Williams suggested that Fed rates at the moment are not restrictive and needs to hike further to get inflation down. Both Atlanta Fed President Raphael Bostic and San Francisco Fed President Mary Daly dismissed the idea of an earlier Fed pivot, while Chicago Fed President Charles Evans says Fed will likely hike for another 125 basis points by year end. Markets also reflected the sentiment, pricing in over 80% chance of a 75 bps hike in the next meeting at the time of writing.

On the fundamentals side, ISM manufacturing PMI fell further to 50.9 in September, which was the lowest since June 2020. ISM non-manufacturing PMI on the other hand came in at 56.7 for September, beating market expectations but was slightly lower than the previous value of 56.9. Labour market data on the other hand suggests signs of slight easing. JOLTs Job Openings in August was 10.053 million, significantly lower than the forecasted 10.775 million and July’s 11.17 million. Initial jobless claims of 219K were also higher than both the market forecast and the previous value. Markets will be focusing on whether the easing in the tight labour market would continue. In other news, crude prices gained after OPEC+ announced a production cut of 2 million barrels per day. Although the actual impact to production might fall in the 1 million barrel range according to Saudi officials, the impact on energy prices remains to be seen under the backdrop of global economic slowdown. Next week, US will be releasing the latest retail sales, CPI, and PPI figures for September, as well as and University of Michigan Consumer Sentiment Index for October.

 ​Europe

European equities joined in the global rally, as market sentiment improved over anticipation of a global central bank pivot. Over the past 5 days ending Thursday, the UK, French, and German indices rebounded 1.68-4.57%. The ECB released the minutes for the September interest rate meeting over the week. Minutes showed that members were concerned that the high inflation expectations were getting entrenched, and recession alone could be insufficient to control inflation. ECB President Christine Lagarde stressed that price pressures in the region has become stronger and more persistent, but the ECB will continue to act until inflation is brought back down to the target level. On the economic front more delayed data came out, the Eurozone PPI in August continue to post new highs, hitting 43.3% YoY in August, higher than the forecasted 43.1% and July’s 38.0%, suggesting that prices likely remain elevated. German factory orders contracted 2.4% MoM in August, Eurozone retail sales fell further by 2.0% YoY, both lower than market expectations and the previous value. Next week, Europe will release the Sentix Investor Confidence for October.

​China

China A-Share markets remain closed over the week in observation of the National Day holidays, while Hong Kong equities mounted a slight comeback, the Hang Seng Index surged 5.90% on Wednesday alone, and posted a respectable 3.34% gain over the week. China FX reserves in September was 3.029 trillion USD, slightly lower than the 3.055 trillion USD in August. It was rumoured that cross-border travel restrictions will be eased after the 20th National Congress of the Chinese Communist Party, and the Hong Kong government might be giving out 500,000 free tickets to attract tourists. Markets await further policy details after the National Congress concludes. Next week, China markets will reopen, and more September economic data is set for release, including CPI and PPI, as well as import and export data.