What to Expect from the Markets on the First Week of Oct. 2024?

The first week of October 2024 promises to be eventful for the markets, with a series of key economic releases and financial events on the horizon. These developments could offer important economic information and potentially influence market direction. Here’s what to watch for this week:

Jerome Powell’s Speech

Jerome Powell, the Chair of the Federal Reserve, is undoubtedly one of the world’s most influential figures in monetary policy. 

Consequently, his statements carry significant financial and economic implications, attracting close attention from analysts, consumers, and traders alike. Today, Monday, 30 September, Powell is set to address the economic outlook before the National Association for Business Economics. 

While the specifics of his speech remain to be seen, analysts at Deutsche Bank anticipate that Powell's comments will largely reflect his remarks from the post-meeting press conference, where he justified the substantial interest rate cut by highlighting improved confidence in inflation and a noticeable shift in downside risks, particularly concerning the labour market. 

In addition to Powell, Fed presidents Bostic, Bowman, Barkin and Williams are set to speak throughout the week, providing valuable insights for those seeking information.

US Labour Update

The labour market is a key indicator of a country’s economic health. The U.S. Labour Department is set to release its Nonfarm Payrolls (NFP) report on Friday, 4 October. This report measures employment across various sectors, excluding farming, private households, proprietors, non-profits, and military personnel. 

Some analysts anticipate that the report will indicate that the US economy has added 144,000 jobs. This week’s report is particularly significant following the Federal Reserve's first interest rate cut in four years earlier this month. The results could influence upcoming monetary policy decisions at the Fed’s meetings on 6-7 November and 17-18 December. 

Additionally, Fed Chair Jerome Powell recently remarked that the labour market remains in “solid condition” despite visible signs of a slowdown characterised by rising unemployment and fewer job opportunities. This raises the question of how quickly this labour market slowdown unfolds, making Friday’s release critical for understanding current economic trends.

Eurozone Inflation 

The Eurozone’s inflation figures for September are set to be released on Tuesday, 1 October. These figures will be closely monitored by the European Central Bank (ECB) as it assesses whether to implement another rate cut during its upcoming meeting on 17 October. Economists anticipate that annual inflation could come in at 1.9%, below the ECB’s target of 2%. If this projection proves accurate, it would mark the first instance that inflation falls beneath the ECB’s target range in nearly three years, largely due to declining energy prices. 

However, it is worth noting that, despite this optimistic forecast, energy prices are expected to rise again as the year draws to a close. In terms of the ECB’s monetary policy, some traders are now estimating a probability of just over 50% for a 25 basis-point rate cut in October, a possibility they deemed unlikely only last week following an unexpected contraction in Eurozone business activity in September, raising concerns that the ECB may be lagging behind. Ultimately, only time will reveal what the future holds and what decisions the Eurozone’s central bank will make.

Earnings Continue 

On the corporate front, traders may want to keep tabs on the upcoming earnings releases from the following companies:

• Nike (NKE) on 1 October.

• Levi Strauss (LEVI) and Tilray Brands (TLRY) on 2 October.

• Constellation Brands (STZ) on 3 October.

What will these reports reveal about the companies and their respective sectors?

More Important Releases

Other releases to keep in mind this week include:

Tuesday, 1 October:

• UK S&P Global Manufacturing PMI

• US ISM Manufacturing PMI

Wednesday, 2 October:

• Eurozone unemployment

Thursday, 3 October:

• Eurozone HCOB Services PMI and PPI

• US ISM services and factory orders.

Overall, these releases are pivotal in understanding these regions' economic health and potential future trajectories. Analysts and traders will likely monitor the data for insights into stability and growth prospects.

Conclusion

The first week of October 2024 promises to be crucial for the markets, with key economic releases and events that could influence future trends. Jerome Powell’s address on the economic outlook and the US Nonfarm Payrolls report will offer vital insights into the health of the labour market and potential shifts in monetary policy. Additionally, Eurozone inflation figures and corporate earnings will be closely watched for signs of economic stability. As analysts and traders assess these developments, the implications for market direction remain significant, making this week a critical period for understanding global economic dynamics.