​ ​US

The much anticipated Fed decision met market expectations. However, the guidance remained relatively hawkish, derailing fed pivot hopes. Markets came under pressure, with the 3 major indices losing 0.10-4.17% over the past 5 days ending Thursday. Earnings season continued, with earnings beats from Pfizer, Starbucks, and ConocoPhillips, while AMD and Moderna missed. The US Fed held its interest rate meeting during the week, and the hike of 75 bps was in line with market expectations. However, Fed President Jerome Powell dashed market hopes for a pivot in the monetary policy. Although he suggested that the Fed could slow the pace of hikes, he warned markets that it would be ‘premature to think about pausing’, and the terminal rate would likely be higher than the consensus. At the time of writing, Bloomberg interest rate futures imply a likely 50 bps hike in December, and expect the rates to surpass 5% in 2023.

As for the economic fundamentals, ISM manufacturing PMI came in better than expected, the October figure of 50.2 beat market expectations of 50.0, though it was still slightly lower than the September figure of 50.9, and the falling trend has not changed since the start of the year. ISM non-manufacturing PMI on the other hand was 54.4, missing both market expectations and came in lower than the previous month figure. As for the labour market, data remains mixed, with initial jobless claims remaining in a down trend, lower than both market expectations and previous values, while continuing jobless claims are higher than market estimates for the last 3 readings and stayed in an uptrend. Next week, the US will be releasing the CPI data for October, the University of Michigan Sentiment for November, and more data on initial and continuing jobless claims.

 ​Europe

European markets had a divergent week, the French and German indices were down 0.01% and 0.61% over the past 5 days ending Thursday, while the UK FTSE gained 1.62%. The Bank of England hiked interest rates by 75 bps on Thursday as markets expected, which was the largest hike in 33 years. However, the Bank was surprising dovish, although they admitted that more rate hikes might be needed to bring inflation in line, BOE Governor Andrew Bailey suggested that the terminal rates will be lower than what is ‘priced into financial markets’. In response to the comment, the Pound fell over 2% against the Dollar on Thursday. As for economic fundamentals, the Eurozone CPI in October came in at a record high of 10.7% YoY, which beat market expectations of 10.2% and was higher than the September figure, the same was observed for the Core CPI, which was 5.0% YoY in October. Markets will be paying attention to when will the trend start to show signs of easing.  Next week, the EU Commission will be publishing their quarterly Economic Forecasts, the UK will release their preliminary Q3 GDP, and Germany will release the industrial production figures for September.

​China

Investment sentiment has turned more positive with various positive rumours in the market. Over the week, the CSI 300 index rose 6.40%, while the Hang Seng Index surged 10.04%, which was one of highest weekly gains in the last decade. It was reported that the US audit inspection was completed earlier than expected, driving speculation that the risks of delisting from US could fade. The new lifted related sectors, and the Hang Seng Tech index in particular surged 7.54% on Friday alone. There was also reports that China is looking to scrap the current system of flight suspensions, which could be a hint of the country shifting away from its tight pandemic restrictions. German Chancellor Olaf Scholz visited China on Friday, which was the first major European leader to do so since the COVID pandemic started. As for fundamentals, China data remains weaker. Caixin Manufacturing PMI was the only PMI that surpassed market expectations at 49.2 in October, other PMIs including NBS manufacturing and non-manufacturing PMIs, as well as Caixin services PMI all fell short of expectations, and all 4 above data points remained in the contraction zone. Next week, China will be releasing the latest 1 year Medium-Term Lending Facility Rate (MLF), exports for October, as well as CPI and PPI data in October.