Financial Markets: Top events last week and what to watch this week

The markets witnessed a week full of economic decisions and indicators, starting from the struggling Chinese economy, passing through the European region, and USA economy, and reaching the Japanese economy.

China:

We start with the Chinese economy, whose industrial data showed a noticeable decline, as industrial production fell to its lowest levels in ten months, while its retail sales declined to approach their lowest levels in a year, and unemployment rates witnessed a slight increase to reach 5.3%, the highest level in five months, to increase these indicators doubts about China's ability to achieve economic growth by 5%.

Despite China's need to implement more stimulus and stimulate its economy, it chose to keep the interest rate unchanged, as the People's Bank of China kept the main lending rate at 3.35%.

Europe:

The British economy witnessed a stability in the inflation index, as it rose on a monthly basis from -0.2% to 0.3%, while the annual inflation rate stabilized for the second month in a row at 2.2%, higher than the target inflation rate of 2% that the British economy had recorded for two consecutive readings between May and June, which prompted the Bank of England to keep interest rates at 5% unchanged, after its only reduction by a quarter of a percentage point at the end of June of this year.

As for the annual inflation rate in the Eurozone, it reached 2.2% in August 2024, down from 2.6% in July 2024, a significant decline from what inflation was a year ago when it recorded 5.2%.

Also, the annual inflation rate in the European Union reached 2.4% in August 2024, down from 2.8% in July, a significant decline from what it was a year ago when it reached 5.9%.

USA:

Last week was one of the most sensitive weeks for the US economy, as retail sales came in lower than expected, falling from 1.1% as a revised reading to 0.1%, which is higher than expectations of a decline to -0.2%.

Then the Federal Reserve announced its decision to cut interest rates higher than expectations, which indicated a reduction of a quarter of a percentage point, so the Federal Reserve cut interest rates by half a full point, from 5.5% to 5%, which was positively reflected on the gold markets significantly.

Japan:

As for Japan, its inflation data was released at the end of last week, which recorded an increase to levels of 2.8% compared to levels of 2.7%.

Despite the rise in the inflation rate in Japan for the fourth consecutive reading, the Japanese Central Bank chose to keep interest rates at levels of 0.25%, despite one of its officials talking about the Central Bank’s openness to raising interest rates to protect the economy from the specter of inflation.

Financial Markets : What are the markets waiting for next week?

The markets will await several indicators and economic events, the most important of which will be with the American side, which will issue indicators during the week, the most important of which are:

• The manufacturing purchasing manager’s index.
• The services purchasing manager’s index.
• The consumer confidence index with expectations of improvement.
• The unemployment claims rates.
• The repercussions of ongoing unemployment.
• And the adjusted GDP reading for the second quarter.

While the most important indicator will be the Federal Reserve's preferred inflation reading represented by the PCE index on September 27, 2024.

The Federal Reserve Chairman will also speak on Thursday on September 26, 2024, at 5.20 pm Dubai time.

We will also be with interest rate decisions issued by major banks as follows:

• The interest rate decision of the Swedish Central Bank on September 25, 2024, which made two cuts, by a quarter point for each cut, to reach 3.5% currently.
• We will also be on Thursday, September 26, 2024, with the interest rate decision issued by the Swiss National Bank, with an expected reduction for the third time by a quarter of a percentage point, to fall from 1.25% to 1%.