The S&P 500 starts the week fresh after hitting a new record high on Friday. China’s GDP beats expectations, but a big fourth quarter jump is required to hit the official target. Japan’s core inflation continues to support cautious BoJ rate hikes.
ANZ Head of G3 Economics Brian Martin reviews the key September economic data prints in the US to explain why market pricing for November and December rate cuts by the US Fed are starting to be dialled back.
5 things to know:
US equity markets start the week after closing at new record highs on Friday - the S&P 500 rose 0.4%. Meanwhile, US housing starts fell 0.4% in September. ANZ Head of G3 Economics Brian Martin says that followed a 7.8% rise in August. Looking through that volatility, Brian says the picture still looks relatively healthy.
Looking at the week ahead, today we have lending rate decisions in China. Brian says preliminary October PMIs for major economies on Thursday will give a sense of momentum at the start of Q4 - particularly in Europe, where there is increasing talk of a 50 bps cut by the ECB in December.
Japan’s headline inflation fell to 2.5% year-on-year in September from 3% in August - the first decline in five months. ANZ FX Analyst Felix Ryan says that doesn’t necessarily reflect a new direction of travel: a ‘core core’ measure rose from 2% to 2.1% - just above the Bank of Japan’s target, and important components of services inflation are still rising.
China’s CSI 300 stock index starts the week on the back of a 3.6% rise on Friday. That came as GDP rose 4.6% in Q3 from a year ago. That was slightly ahead of the market consensus. ANZ Economist Vicky Xiao Zhou says while that’s a positive, growth has slipped from 5.3% in Q1 and 4.7% in Q2.
Also out on Friday was data on China’s industrial production - it rose 5.4% in September following 4.5% in August, led by high-tech and ship-building industries. Vicky says that’s just one side of a two-speed economy though, with China’s property market continuing to be a drag.
Cheers
Alex
PS: Catch you tomorrow with analysis of China’s property support package announced last week.
