The US labor market and the OPEC+ meeting are the most important variables for next week.
During the past week, we saw mixed performance in US markets, and the best was the S&P500 index, which rose by 1.56% to trade above the 4,000 mark, while the Dow Jones rose slightly, better than the previous week, to settle above 34,200 points.
On a different note, Global recession fears and closures in China affected oil prices. Falling by more than 6%, to hit its lowest level in 11 months at $75.27 a barrel. But was able to pair losses on renewed hopes tat OPEC+ could cut production again.
At the beginning of the week, gold continued the downward trend because of the strength of the US dollar, falling towards $1,730 an ounce, then it rose again before the FOMC minutes, which showed the consensus of its members open to ease the pace of a tight monetary policy by reducing the size of interest rate hikes.
The Federal Reserve is monitoring the strength of the US labor market
The spotlight will fall on US labor market data at the end of the week to get more clues regarding the Feds current monetary policy. The recent labor market data reflected that the US economy has begun to add a relatively smaller number of jobs as it reaches full stage of employment with 200K jobs expected to be added in November after the reading of 263K in the previous month of October and 315K jobs before that. Reflecting the difficulty, the labor market will now have as it tries to achieve a balanced economy with soaring inflation.
Companies too are struggling as well as individuals through rising debt and high cost of borrowing. Businesses will soon be unable to expand if they haven’t already, and the labor market will start to shrink, causing layoffs that will automatically generate an even higher cost of living for individuals.
The delay witnessed by the Federal Reserve’s intervention to tackle inflation at the very beginning when Powell continuously stated that its “transitionary” reflects the consequences that the economy is facing now, as they intervened late which is why its taking an enormous amount of effort to curb the highest level of inflation in 40 years.
Inflation data in the eurozone
On the other hand, markets are closely anticipating Eurozone inflation data this Wednesday. After the European Central Bank rose rates by 75 basis points three times consecutively, making it a record.
The figures will be closely watched as the European economy continues to suffer from the shortage of energy supplies. And the upcoming newly placed sanctions on Russia on December 5th, which is likely to lay negative outcomes on the Eurozone.
But as the ECB continues to raise interest rates, prices will continue to rise too, therefore inflation will stay a key dominant issue in the banks plans for the coming period. Sings of recovery from inflation, will prompt the ECB to slowdown the pace of increasing interest rates which we should see soon, keeping in mind the current aggressive pace.