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Top 5 Things to Watch in Markets in the Week Ahead

Economy Oct 02, 2022 07:42AM ET
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By Noreen Burke

Investing.com -- Investors will be looking closely at Friday’s U.S. jobs report to assess how much impact the Federal Reserve’s rate hikes are having on the economy. Several Fed officials are also due to speak during the week, as markets try to gauge their appetite for another 75 basis-point rate hike at the bank’s November meeting. U.S. equity markets look set to remain volatile after closing the books on their third straight quarterly decline on Friday. In the U.K. investors will be looking at the Conservative Party's annual conference for any indications of a U-turn on the government's tax-cutting budget which has sent sterling plummeting and government borrowing costs soaring. Meanwhile, OPEC is reported to be considering a major production cut at its upcoming meeting on Wednesday. Here’s what you need to know to start your week.

  1. September employment report

Friday’s jobs report for September will show whether the Fed’s aggressive series of rate hikes is having an impact on the labor market.

Economists are expecting the U.S. economy to have created 250,000 jobs last month, with the unemployment rate holding steady at 3.7% and wage growth staying elevated.

Recent jobs data have indicated that the labor market remains robust despite a series of jumbo-sized rate hikes.

Another strong jobs report could underline the case for even more hawkishness from the Fed, potentially roiling markets already hard hit by worries over how high rates may have to rise as the central bank battles the worst inflation in forty years.

On the other hand, indications that the labor market is slowing could add to fears that aggressive Fed tightening risks tipping the economy into a recession.

  1. Fedspeak

Several Fed policymakers are due to make appearances during the week, including New York Fed President John Williams, Atlanta Fed President Raphael Bostic, Chicago Fed President Charles Evans, San Francisco Fed President Mary Daly, and Cleveland Fed President Loretta Mester.

Investors are assessing the likelihood of another 75 basis-point rate hike at the Fed’s November meeting. Recent comments by Fed officials have indicated that they want to see clear evidence of slowing inflation before they let up on the policy tightening.

The Fed’s policy rate is now in the 3.00%-3.25% range, a full 3 percentage points higher than where it was at the start of 2022, and officials have penciled in more rate rises later this year and in 2023.

The economic calendar also includes data on August job openings along with surveys of manufacturing and service sector activity from the Institute of Supply Management, which are expected to remain solid.

  1. Stock market volatility

Markets are entering the final leg of 2022 after closing out a tumultuous third quarter on Friday, roiled by stubbornly high inflation, rising interest rates and recession fears.

Wall Street has posted three quarterly declines in a row, the longest losing streak for the S&P 500 and the Nasdaq since 2008 and the Dow's longest quarterly slump in seven years.

As the Fed ramped up its monetary policy tightening to tame the worst inflation in decades, U.S. Treasury yields shot to their highest levels in more than a decade, slamming stock valuations.

Many investors believe the wild moves will continue until there is evidence that the Fed is winning its battle against inflation, allowing policymakers to eventually end monetary tightening.

  1. U.K. market turmoil

The Conservative Party's annual conference gets underway on Sunday and market participants will be closely watching speeches by party leaders after the new government triggered a market meltdown with its Sept. 23 ‘mini-budget’ which included plans to slash taxes and pay for it with borrowing.

Within days sterling hit record lows, and soaring government borrowing costs forced the Bank of England to intervene to stem a market rout.

The BoE's pledge to buy $69 billion (£65 billion) of long-dated gilts has calmed markets for now, but it's too soon to say the rout is over. The BoE is now in the position of having postponed its plan to sell bonds, resulting in monetary loosening, and at the same time tightening with interest rate hikes.

In November, it is expected to raise rates further and it has said it will stick to a plan to sell its bonds.

Investors say the government will have to work hard to restore confidence.

  1. OPEC meeting

The Organization of the Petroleum Exporting Countries and allies, including Russia, are to meet on Wednesday at OPEC's headquarters in Vienna to finalize output quotas for November.

Earlier Sunday, Bloomberg reported that the group will consider cutting output by over 1 million barrels per day, against a backdrop of falling oil prices and severe market volatility.

Oil prices soared following Russia’s invasion of Ukraine in February but have since fallen back amid concerns over the impact of aggressive monetary tightening on the outlook for global growth. The stronger U.S. dollar has also weighed on prices.

-Reuters contributed to this report

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (16)
Gershom Zvi
Gershom Zvi Oct 02, 2022 11:42PM ET
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Only oil will be a real big so buy oil stocks are last resort of Biden’s market
Niels Jorgen
Niels Jorgen Oct 02, 2022 11:42PM ET
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Trump made this? You dont see that really? Biden is just handleling it… all the problems come from before he took office these thing do just happen.
Clay Douglass
Clay Douglass Oct 02, 2022 11:42PM ET
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speak English
Kerry Ditto
Kerry Ditto Oct 02, 2022 10:53PM ET
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after 7 days market will be up big. I thank me for everything.
Kerry Ditto
Kerry Ditto Oct 02, 2022 10:14PM ET
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volatility to ignore. what matters is closing price. market will be up at day end, week end, month end, and year end, decade end, which matter.
Richard Saunders
Richard Saunders Oct 02, 2022 8:38PM ET
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Jesus Christ https://investing.com. can't you get a handle on all these scam bots?????? JESUS CHRIST.
Mo Lm
Mo Lm Oct 02, 2022 6:02PM ET
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Watch out for more FED manipulation should be a permanent #1
Martien Trent
Martien Trent Oct 02, 2022 2:33PM ET
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Upcoming week looks interesting, let's go get it
David Farrington
David Farrington Oct 02, 2022 12:42PM ET
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Great information! Thank You and to a fantastic week ahead!
Warm Camp
Warm Camp Oct 02, 2022 12:27PM ET
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US stagflation is a hard truth that media and government try to ignore before US midterm elections. Once the elections are over, the truth will be admitted. However, the market recognizes and follows the truth much better than government and media. This explains why the market is already in deep bear mode.
First Last
First Last Oct 02, 2022 12:27PM ET
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False on "US stagflation is", not with no officially-declared recession and low unemployment.
Warm Camp
Warm Camp Oct 02, 2022 12:27PM ET
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First Last Are you waiting for “official declaration”? You will have it after the elections. Hilarious.
John Berry
John Berry Oct 02, 2022 11:50AM ET
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Feds put us in this predicament and will bail us out soon like they always do.
Warm Camp
Warm Camp Oct 02, 2022 11:50AM ET
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The Fed is not a magician. The economic crisis has been made by politicians. The Fed has no tools to fix politics.
First Last
First Last Oct 02, 2022 11:50AM ET
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It's Russia
me ish
me ish Oct 02, 2022 11:18AM ET
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finally the Buy the Dip retail investors have worked out that we're in a bear market - we're about to have a massive dump on Monday
John Berry
John Berry Oct 02, 2022 11:18AM ET
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Who cares. Eventually it will go up like it always does.
Earl Barnett
Earl Barnett Oct 02, 2022 11:18AM ET
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John Berryuntil it doesn’t. The ride eventually has to end at some point 🤷🏻‍♂️
First Last
First Last Oct 02, 2022 11:18AM ET
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Earl Barnett  If stock market doesn't go back up, it means Putin made good on his nuclear holocaust threat.  Then who cares what the market does.
 
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