Cues to watch: Bank of Japan meeting & lots of inflation data
(Image for representation) US, EU stock markets tank
The Bank of Japan's (BOJ) interest rate meeting on Thursday is a highlight for next week, and across the APAC region, look out for a raft of inflation data.
The BOJ is set to remain on pause and leave the policy rate unchanged. The central bank is expected to reiterate its core message that if the economy develops according to forecasts, it will continue normalising monetary policy. Markets will pay particular attention to the BOJ’s quarterly outlook report.
In the US, one could be forgiven for questioning why the Fed cut rates by 0.5 per cent in September, given the backdrop of 3 per cent growth, low unemployment, equity markets at all-time highs, and inflation still above 2 per cent, and why the market expects the fed to cut rates down to 3 per cent.
Those questions could intensify over the coming week.
In the US, the focus shifts to growth data on Wednesday. Strong consumer spending is expected to power a second consecutive 3 per cent GDP print. This report will also set a marker for the US economy's resilience. High-income households are going from strength to strength.
However, lower-income households feel more pain as inflation's legacy hurts spending power much more. The US jobs report will be back in the spotlight on Friday. After last month's sizeable 254,000 increase, the consensus is looking for a weaker outcome this time around.
The weather will play a part, with hurricanes in the southeast impacting workers' ability to get to their place of employment. Likewise, the strikes at Boeing will weigh on the payroll number, with likely knock-on effects on suppliers.
In the UK, it's all about the budget on Wednesday. Chancellor Rachel Reeves has little choice but to increase day-to-day government spending. That inevitably means higher taxes, potentially centred on employers. Higher investment is coming too.
However, markets expect this boost to be more modest. The reason: the treasury seeks to avoid a steep increase in borrowing that might unsettle markets.