Market recap and outlook for week 40

30 September 2024

Paul Reid

Financial Journalist at Exness

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The market started week 40 running. Here are the main headlines that traders should be monitoring this week.

US jobs boom adds to Fed's rate dilemma

Last week's US jobs report revealed a surprising surge in employment, with 336,000 jobs added in September, significantly exceeding expectations. This strong showing paints a picture of a resilient labor market, but it also complicates the Federal Reserve's efforts to combat inflation. The fear is that a tight labor market could fuel wage growth and keep inflation elevated, potentially forcing the Fed to maintain its hawkish stance on interest rates. Traders will be closely watching the upcoming Federal Reserve Chair's press conference for any hints about future monetary policy decisions.

What to watch: USD, US treasuries, US equities

Nvidia's AI-powered surge

Nvidia's shares hit record highs following a stellar earnings report, underscoring the booming demand for its AI chips. This reinforces the company's dominance in the artificial intelligence sector and suggests continued growth potential for AI-related stocks.

Assets to watch: NVDA, AI-related stocks

Eurozone economic woes deepen

Disappointing manufacturing and services PMIs for the Eurozone point to a deepening economic downturn. This gloomy outlook could put further downward pressure on the Euro and European equities.

Assets to watch: EUR, European stocks

US manufacturing slump persists

The US manufacturing sector contracted for the tenth consecutive month, raising concerns about the broader economic outlook. While the services sector remains a bright spot, a prolonged manufacturing slump could eventually weigh on overall growth.

Assets to watch: USD, cyclical stocks

China's stimulus-fueled rally

Chinese stocks surged after the government announced additional stimulus measures aimed at reviving the economy, particularly the property sector. This optimism, coupled with hopes for a turnaround in China's economy, also lifted commodity currencies like the Australian and New Zealand dollars.

Assets to watch: Chinese stocks, AUD, NZD

Other notable developments

  • Nio's shares jumped after a significant cash injection from existing shareholders.
  • Stellantis, the Chrysler owner, lowered its profit margin forecast due to a slowing auto market.
  • Gold prices touched a record high, fueled by the Fed's recent rate cut and geopolitical tensions.

Outlook for week 40

This week is loaded with critical economic data releases and central bank events. Traders should keep a close watch on:

  • US ISM non-manufacturing PMI (Sep): Could impact USD and US equities.
  • Germany factory orders m/m (Aug): Could influence EUR and German stocks.
  • Canada interest rate decision: Watch for any hints about future rate moves and their potential impact on CAD.
  • UK interest rate decision: A rate hike could strengthen GBP and impact UK stocks.
  • US CPI and Core CPI (MoM) (Sep): Hotter-than-expected inflation could trigger market volatility and impact Fed policy expectations.
  • US nonfarm payrolls report: Significant deviations from forecasts could cause fluctuations in the USD and other asset classes.
  • Canada employment change: Positive data could strengthen CAD and influence energy markets.

Conclusion

The week ahead presents a mix of opportunities and risks. Traders should remain vigilant, monitor key economic events closely, and be prepared to adjust their strategies based on the evolving market landscape.

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