Market Update

The prospect of potential easing of Chinese Zero-Covid restrictions, combined with indications of a potential slowdown in central bank monetary tightening, provided a boost to global equity market sentiment this week.
While Federal Reserve Chair Jay Powell signaled on Wednesday, November 30, 2022, that interest rates would continue to rise and remain at elevated levels to combat US inflation, he also hinted that policymakers at the US central bank might reduce the pace of interest rate increases at their upcoming meeting on December 14, 2022.
Supporting the case for a slower monetary tightening pace was this week's Eurozone inflation data, which dropped to 10.0% due to lower energy costs. This added to the growing evidence that global inflation may have peaked. November's headline inflation reading not only came in well below October's figure of 10.6% but also fell short of economists' expectations, which had anticipated a reading of 10.4%.
The only drawback this week came from the US employment report. The Federal Reserve currently believes that it needs to observe sustained weakness in the labor market to bring down inflation. However, today's (Friday, December 2, 2022) US employment data showed a much stronger performance than economists had expected, with payrolls increasing by 263,000 compared to the anticipated 200,000.
Nonetheless, there is a possibility that the historical pattern of employment falling during an economic slowdown may not necessarily repeat itself this time. Companies, still mindful of the coronavirus-related supply chain disruptions, seem reluctant to lay off staff to safeguard against future resignations and ensure they have a workforce with the required skills as the economy gradually recovers. This approach allows them to avoid the time and expense associated with hiring and training new employees.
Looking ahead to the coming week, there are several significant events on the horizon, including an OPEC+ meeting, US factory orders, US mortgage applications, Chinese CPI inflation, US and Chinese PPI inflation, Eurozone retail sales, Chinese PMI data, Chinese trade balance figures, and the University of Michigan Consumer Sentiment Index.