Markets await key central bank decisions this week

Equity markets

Equity markets were hesitant on Monday as investors and traders awaited key central bank decisions this week. On Wednesday, the Federal Resrve (Fed) is widely expected to keep rates steady. The bigger question is whether the Fed is done with rate hikes.

Some of the recent Macroeconomic indicators plead for a resurgence in economic activity, therefore raising the risk of renewed price pressures. If this Wednesday's decision is a given, the November meeting could be a close call, and the Federal Open Market Committee (FOMC)'s economic projections will be of particular interest.

The Bank of England

The Bank of England is likely to raise interest rates once again on Thursday. All but one of the 65 economists polled by Reuters in recent days predicted Andrew Bailey would raise rates by 25 basis points to 5.5%.

Recent data like industrial production and monthly gross domestic product (GDP) both coming out worse than expected last week could suggest this could be the end of the tightening cycle. But inflation remains much higher than in any other major economy, and last week's average hourly earnings let economists think that it could remain so for some time to come.

The Bank of Japan

In Asia, the highlight of the week will be the Bank of Japan (BOJ) meeting on Friday. Recently, BOJ governor Ueda fuelled speculation of an imminent move. Don't expect a rate hike just yet, though. The key short-term interest rate is seen unchanged at -0.1%.

And let's not forget that the People's Bank of China (PBOC) is also due to update the market on Wednesday. The one-year and five-year loan prime rates are expected to remain at 3.45% and 4.2%, respectively, as last week the one-year and medium-term loan facility rates were kept at 2.5%.

The UK consumer price index

The UK consumer will be the centre of attention throughout the week. On Wednesday, the consumer price index is forecast to rise 7.1% in August YoY, accelerating from the 6.8% increase recorded in July. Core CPI growth is seen decelerating to 6.8%. More consumer-related data is due on Friday. GfK consumer Confidence is forecast to fall to -27 in September, and retail sales are forecast to rebound, up 0.6% MoM, after a 1.2% fall in July.

Ocado and ASOS

On the equity market, several retailers will complete the picture of the state of consumption in the UK. Starting tomorrow with trading statements from Ocado and ASOS , as well as Kingfishers half-year earnings. On Wednesday, we'll get Dunelm's full-year earnings, and on Thursday, we'll get the half-year reports from Next and JD Sports Fashion.

Oil prices

Oil prices are up again this Monday. Last week, WTI climbed to its highest level since November 2022, going over $91 a barrel, extending a rally that has put a return to $100 a barrel sharply into focus. Some analysts believe crude prices could hit this milestone before year-end. Last Friday, we had the first sizeable Baker Hughes rig count rise in quite a while.

The number of total rigs in operation rose by nine to 641. To get an increase of more than one, we need to look back to early July. and to get a rise of nine, we have to go back to November 2022. A rise is mostly due to gas rigs in operation. The number of functioning oil rigs rose only by two.