Key events to watch in the week ahead: 27 November – 3 December 2023

This week’s overview

The holiday-shortened week in the US has seen global equities market drift higher amid lighter volume, with the Nasdaq touching its highest level since January 2022 on four straight weeks of gains. On the other hand, an attempt to bounce for the US dollar found some resistance at its 100-day moving average (MA), while gold prices are still seeking for the catalyst to overcome it key psychological US$2,000 level.

Aside, hopes of more stimulus from China helped the Hang Seng Index (HSI) reverse out of the red for the week, but reservations still very much remain, given the on-and-off recovery momentum that markets have witnessed from previous rounds of policy support.

Heading into the new week, here are four things to note.

29 November 2023 (Wednesday, 8.30am SGT): Australia’s monthly consumer price index (CPI)

Earlier this month, the Reserve Bank of Australia (RBA) raised its cash rate by 25 basis point (bp) to 4.35% amid an upward revision in its inflation forecasts. Since then, the RBA communique has taken a more hawkish tilt, with the minutes from the board meeting noting that the bank's latest forecasts "were predicated on an additional one to two increases in the cash rate over coming quarters."

Any upside surprises in the inflation data next week will likely validate policymakers’ views for additional tightening, which is currently priced to be a 25 bp hike in February 2024. Ahead, the market is looking for the monthly CPI indicator to fall to 5.2% YoY from 5.6% in September.

30 November 2023 (Thursday, 9.30am SGT): China’s National Bureau of Statistics of China (NBS) purchasing managers index (PMI)

The recovery in China’s economic conditions remains uneven, with its October manufacturing PMI dipping back into contractionary territory after a short-lived expansion (49.5 versus 50.2 in September). Services sector activities have turned in its slowest growth this year as well (50.6 versus 51.7 in September), overall highlighting the challenges that authorities continue to face in stimulating the economy.

Ahead, expectations are for China’s manufacturing PMI to improve slightly to 50.0 from previous 49.5, while non-manufacturing PMI is expected to improve to 51.5 from previous 50.6. Still-weak data may see authorities laying more options of policy support on the table, while markets continue to seek for the conviction for a sustained recovery in the world’s second largest economy.

30 November 2023 (Thursday, 6pm SGT): Eurozone’s flash November inflation rate

In October, Eurozone’s headline inflation has registered a two-year low with a dip below the 3% mark. Its core inflation has also moderated to its lowest level in 15 months at 4.2%, overall backing the European Central Bank (ECB)’s decision to keep policy rates on hold in October after ten consecutive hikes.

But with both inflation measures still a distance from the ECB’s 2% goal, ECB President Christine Lagarde has warned against any premature inflation celebration. She maintained that the central bank is ‘not done’ yet in its inflation fight, which points to an extended period of elevated borrowing costs.

Further inflation progress in the coming week may back expectations for the ECB to keep borrowing costs on hold into 2024 and allow more room for the central bank to consider rate cuts if economic risks persist.

30 November 2023 (Thursday, 9.30pm SGT): US core Personal Consumption Expenditures (PCE) price index

The US Federal Reserve (Fed) has adopted a more cautious tone around tightening lately, which anchored market expectations for further rate hold over coming meetings. But with September inflation still above target, US policymakers continue to hold the thought for more to be done, if pricing pressures were to stay stubborn.

The upcoming PCE price data, which is the Fed’s favoured inflation metric, will help to clarify the extent to which the disinflation process was continuing. It will also be on watch to provide validation for market pricing of rate cuts as early as June 2024.

Expectations are for US headline PCE to moderate to 3.1% year-on-year in October from previous 3.4%, while the core aspect is expected to soften to 3.5% from previous 3.7%. Month-on-month, the headline and core inflation is expected to grow 0.1% and 0.2% respectively.