Dubai: Global markets are expected to move sideways this week as inflation concerns and the possibility of an early rate hike can keep stocks worldwide on edge.
Analysts are currently evaluating how global benchmark indices are expected to largely move sideways as investors are trying to gauge the impact of rising inflation on foreign portfolio investments.
Inflation up in US, China
This sentiment is largely supported by higher-than-usual inflation data recorded in the US and China last week, fanning fears of an earlier-than-expected rate hike, which in turn boosted US bond yields.
The US inflation hit its highest in three decades, while inflation in the world’s second largest economy China rose 1.5 per cent, while the producer price index rose by 13.5 per cent owing to imported inflation and domestic supply shortages.
US stocks lose steam
In the US, the world’s top economy, stock markets were on track for a record-setting week, but the streak was cut short on concerns about rising prices after retail inflation hit a 30-year high at 6.2 per cent in October.
On Friday, a Consumer Sentiment Index reading dropped to 66.8 for the month of November, its lowest level since 2011, on worries of inflation negatively impacting living standards in the US.
More inflation gauges
UK employment and inflation figures are also expected to be released this week, with particularly the inflation numbers closely-watched after the Bank of England’s decision not to raise rates.
With inflation numbers expected to be published in Japan and Canada as well, analysts are of the view that more such indicators will maintain the global focus on inflation.
Earnings wind down
Although the corporate earnings season is winding down this week, there are still a few remaining industry heavyweights still expected to report in the days to come.
Next week, many of the largest retailers in the US will report earnings, as well as some of China’s biggest internet and ecommerce giants, including Alibaba and JD.com.
On Tuesday, Walmart will report earnings, followed by Target, Macy’s and Kohl’s, in the US, along with updates from Imperial Brands and Royal Mail in the UK.
China earnings to disappoint
Alibaba and JD.com reported record Singles’ Day sales earlier this week, but experts evaluate how the Chinese e-commerce giants are expected to report a slump in revenues when they release their quarterly reports next week, largely impacted by regulatory restrictions in China.
Chinese internet streaming companies Bilibili and iQiyi will also report on Wednesday, with both expected to post losses.
Global stocks rally
Global equity markets rallied on Friday, with European shares hitting new highs on strong earnings, while the US dollar eased but posted its biggest weekly gain since late August.
MSCI’s all-country world index closed up 0.64 per cent, while the broad STOXX Europe 600 index rose 0.30 per cent to a record closing high. France’s CAC40 index and Germany’s DAX index also ended at record closing highs.
Gold price soars
Gold rose to notch its best week in six months and extend a winning streak to seven sessions. The advance has been spurred by surging US consumer prices that bolstered the metal’s appeal as an inflation hedge and rattled bond investors.
US gold futures settled up 0.3 per cent at $1,868.5 an ounce, adding to a gain of about 2.7 per cent for the week.
Oil hit by firm USD
Crude prices were hit by a firmer dollar. Brent crude settled down $0.70 at $82.17 a barrel. US crude fell $0.80 to settle at $80.79 a barrel.
The US dollar index, which tracks the greenback versus a basket of six currencies, last slid 0.046 per cent to 95.117 by the end of the week.
Tech push for US markets
On Wall Street, mega-cap stocks Microsoft Corp, Apple Inc, Meta Platforms Inc, formerly Facebook; Amazon.com Inc and Google parent Alphabet Inc led US stocks higher.
On Wall Street, the Dow Jones Industrial Average rose 0.50 per cent, the S&P 500 added 0.72 per cent and the Nasdaq Composite advanced 1 per cent.
