Coming up on the markets

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Australia’s employment data, RBA meeting minutes, China and US retail sales, UK CPI, Nvidia earnings in focus.
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Despite the crypto rout, uncertainties about the US political landscape, and an ongoing hawkish Fed, the recent equity markets’ resilient moves may tell that investors are looking to a sooner-than-expected Fed pivot amid weak company earnings, deteriorated economic data, and widened recession risks. This week, there is a slew of influential economic data from major countries, which will offer more clues to the global markets’ trajectory. Plus, the last US mega-cap tech company, Nvidia earnings will be also in the spotlight.

Is China’s reopening inevitable? More economic data may point to its deteriorated growth outlook

The recent weaker-than-expected Chinese economic data tells that the Covid-zero policy is not sustainable since the country is still targeting a 5.5% growth rate in its GDP.  Though the expectations were already low, the recent data, including the imports and exports, CPI, and PPI, all came weaker than estimated, highlighting how badly the covid-curb measure has had an impact on the world’s second-largest economy. China’s October retail sales, industrial output, fixed assets investments, and the unemployment rate will be all due for release at AEST 1:00 pm this Tuesday. Consensus shows that retail sales may slow down to only a 0.9% growth year on year in October from a 2.5% increase the prior month due to the renewed lockdowns in some parts of the country, while its industrial output may drop to 5.2% from 6.3% in September. But the reopening bet is still in play, along with the recent Chinese stock markets’ strong rebound.

Has Australian employment hit its peak? 

Australian employment data is due for release on Thursday. Despite a decades-low unemployment rate of 3.5%, the Australian labour market may have reached its tightest state with only 900 new jobs added, and 9,000 people becoming unemployed in September. A pick-up in the unemployment rate may further support the RBA’s dovish turnaround in its monetary policy, in which the Reserve Bank will release its meeting minutes for November. There are no expectations for any changes to a slowdown in the tightening approach after the bank raised the cash rate by only 25 basis points in November instead of a 50 basis point hike. The bank is expected to do another 25 basis points hike to a peak of 3.10% in December. 

In addition, the country’s third-quarter wage price index change which is due for release on Wednesday is also a barometer for the Reserve Bank to decide on its policy as elevated wage growth will offer upside risk to inflation, which may prolong the rate hike cycle, slowing down the economic growth. The data climbed by 2.6% in the second quarter, to the highest since Q3 2014, thanks to an accelerating increase in the construction industry.

US consumers may not suffer as much as the other nations

‘The latest US consumer price index (CPI) for October came in at 7.7%, below expectations of 7.9%, while core prices also dropped sharply from 6.6% to 6.3%.

After flat growth in US retail sales in September, it is expected that the October data will grow 0.8% month on month, showing that consumers may not be affected badly by high inflation and rising rates due to strong labour markets and wage growth. But the retailers are facing issues of excessive inventories and inflationary pressure, which may lead to a downturn in sales in the next year. The core retail sales, excluding automobiles, are forecast at a 0.4% growth from the prior month. The data is due for release on Thursday.

Are there any signs of cooling inflation can save UK’s recession fate?

Bank of England continues to warn of an economic recession amid the worst macro headwinds that the country has ever faced, with its September inflation elevating to 10.1% at a 14-year high. Annual food prices rose 14.7% last month, and the data may continue to soar due to the disruptions in shipping and a jump in energy prices caused by the Russia-Ukraine war. UK’s October CPI is due for release on Thursday.

Nvidia’s third-quarter earnings report

Nvidia’s shares are down 60% from their November high in 2021 but rebounded about 27% from the October low. The macro headwinds, slowdown in PC demands, and the US chip export ban to China have been bearish factors for the company’s stocks. Cryptocurrency’s meltdown has also badly reduced chip demands. Nvidia heavily missed both revenue and EPS expectations, recorded at US$6.7 billion and US$0.51, respectively in the second quarter due to a sharp drop of 30% annually in its gaming department revenue. The consensus for Nvidia’s earnings per share is US$0.70 and the company expects revenue of US$5.9 billion for the third quarter.


Tina Teng is a Markets Analyst at CMC Markets APAC & Canada


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