Focus on U.S. Inflation and Federal Reserve Meeting
Later in the day, all eyes will turn to U.S. inflation as the Federal Reserve commences its two-day policy setting meeting. This meeting bears significance as it will shape expectations regarding rate cuts in the coming year. Market participants eagerly await the outcome, as it could make or break their projections.
Analysts estimate that wages in Britain, excluding bonuses, for the three months leading up to October are expected to experience a slowdown, rising by 7.4% compared to a 7.7% increase in September. While it is expected that the Bank of England will maintain existing rates during their meeting, the market’s focus is on the timing and pace of future rate cuts.
According to the CME FedWatch tool, market sentiment regarding a rate cut in March has shifted from a 57% probability to a 45% probability within a week, indicating the perceived uncertainties surrounding the rate cut timeline.
Central Bank Decisions Awaited in 2023’s Final Stretch
Additionally, investors are preparing themselves for the final central bank bonanza of 2023. The European Central Bank, Norges Bank, Swiss National Bank, and the Bank of England will all announce their policy decisions. The outcomes of these decisions, alongside the Federal Reserve’s stance, will significantly affect market dynamics.
Investor caution has been evident this week, with MSCI’s broadest index of Asia-Pacific shares outside Japan slightly increasing by 0.5%. Meanwhile, the dollar has experienced a slight downturn, with the yen recovering from its losses overnight. Financial markets remain watchful.
Antitrust Trial Outcome Impacts App Store Economy
In the realm of corporate news, Epic Games, the creator of “Fortnite,” has emerged victorious in a high-profile antitrust trial against Google’s parent company, Alphabet. The ruling, if upheld, has potential to disrupt the entire app store economy, marking a significant development in the tech landscape.
Sanofi, the French pharmaceutical company, will also capture attention as it terminates an exclusive licensing agreement with Maze Therapeutics. The termination is a result of objections raised by the U.S. government concerning a drug developed to treat Pompe disease. Investors will closely monitor the repercussions of this decision.
Economic events to watch include the release of the UK ILO unemployment rate for October and data on average earnings in the three months leading to October.