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General Market Analysis | 20 November 2023

Mixed Start for the Markets this Week

It could be a pivotal week for global financial markets as investors hope that the recent ‘risk on’ sentiment continues into the year end. US markets took a bit of a breather on Friday having experienced another good week on the back of increased expectations that the Fed has finished hiking rates in this cycle. The major indices all closed close to flat, with Dow up just 0.01%, the S&P up 0.13% and the Nasdaq 0.08% in the black. There was a bit more volatility in other sectors with dollar continuing to drop off in line with US treasury yields and Oil jumping over 4% after its recent sharp decline.

Data is Key in the Weeks into Year End

US Stock markets have rallied well over the last few weeks since the Fed paused again in its tightening cycle and data pointed to inflationary pressures easing. However, we now enter into the last six weeks of the year and those traders hoping for a quiet run into the Christmas trading period and New Year are likely to be disappointed. Investors are now pondering how much of any potential rate cuts in 2024 are priced into a soaring market – the S&P is up over 9% in the last three weeks – and any data that shows the battle with inflation could be back on could see some serious corrections. This week is relatively quiet in terms of US data releases, and we have Thanksgiving at the end of the week which usually leads to a few quiet sessions but, expect volatility to pick up strongly as we hit the tier 1 US data in the first couple of weeks in December into the last FOMC meeting of the year.

Quiet Start to the Week Today

It’s another Monday with a relatively tepid macroeconomic event calendar set to see more rangebound conditions for traders. The Asian session could see some volatility around the Chinese Loan Prime Rate announcements with investors once again looking for some stimulus, however, expectations are for no change on the 1-year and 5-year rates. There is little else on the calendar of note across the rest of the sessions until much later in the day when we hear from Bank of England Governor Andrew Bailey when he speaks in the London evening, given recent data updates there, sterling traders will be paying close attention to what he has to say.