U.S. PCE Inflation Report and China Manufacturing Data Draw Attention, OPEC Meeting Highly Awaited
U.S. shares recorded another weekly gain after two out of three major stock indices finished at all-time highs Friday. The S&P 500 added 0.21 percent to 2,602.42, closing at a record. The Nasdaq Composite Index gained 0.32 percent to 6,889.16, also clinching an all-time high. Meanwhile, the Dow Jones Industrial Average inched 0.1 percent higher to 23,557.99, less than half a percentage point from its record finish at 23,590.83. For the week, the S&P 500 and the Dow both posted a weekly gain of 0.9%, and the Nasdaq rose 1.6 percent.
By contrast, the U.S. dollar hit its lowest since Sept. 25 on Friday and marked its third weekly loss in a row on Friday, weighed down by concerns that the Federal Reserve may be hesitant to deliver further interest-rate increases next year due to stubbornly low inflation. The ICE U.S. Dollar Index lost 0.5% to 92.781, a two-month low. While a rate hike in December is still almost fully priced in, investors pared back expectations for further rate hikes in 2018, which puts pressure on the dollar.
On the data front, a pair of surveys of American companies showed that domestic businesses grew in November at the slowest pace in four months. Indeed, the Markit flash manufacturing PMI dropped to 53.8 from 54.6, while the flash services PMI edged lower to 54.3 from 54.6.
In the week ahead, market participants will focus on comments from a number of Federal Reserve speakers, including Fed Chair Janet Yellen testifies on the economy on Capitol Hill, before the Joint Economic Committee on Wednesday. One day before, Fed governor Jerome Powell, selected by President Donald Trump as the next Fed chair, is scheduled to appear before the Senate Banking Committee for his confirmation hearing.
U.S. second estimate of GDP growth for the third quarter will be released on Wenesday amidst expectations calling for a small upward revision from 3.0% to 3.2%.
After Fed’s policymakers’ speeches, the Commerce Department is due to publish data personal income and consumer spending for October, which include the personal consumption expenditures (PCE) inflation data, the Fed’s preferred metric for inflation on Thursday. Analysts expect the report to show U.S. core PCE price index advanced by 0.2% last month, which would send the index 1.4% higher on an annualized basis.
This week’s calendar also features reports on ISM manufacturing sector growth, CB consumer confidence, new home sales, pending home sales and monthly auto sales
Turning to the euro, the single currency added nearly 0.7 percent on Wednesday to trade at as high as $1.1932 – the strongest level since September 22. For the week, the common currency jumped 1.14%, its second consecutive weekly gain of more than 1%.
Next week, the euro zone will publish flash inflation figures for November on Thursday, which is forecast to rise 1.6 percent following an increase of 1.4% in October. The core figure, which strips out volatile energy and food prices, is anticipated to increase by 1.0% from volatile energy and food prices. CPI reports from Germany, France, Italy and Spain will also be on the agenda.
In China, the Federation of Logistics and Purchasing is to release data on November manufacturing sector activity on Thursday with expectations for a modest downtick to 51.5 from a reading of 51.6 in October. Meanwhile, the Caixin manufacturing index, which focuses more on small and mid-sized firms, is due on Friday and is expected to dip by 0.1 points to 50.9.
U.S. oil prices finished at a 2½-year high in an abbreviated session on Friday. While West Texas Intermediate crude futures for January delivery rose 1.64 percent to $58.95 a barrel, settling at levels not seen since the summer of 2015, Brent futures added 0.28% to trade at $63.73. Both global crude oil benchmarks logged four consecutive weekly gains.
Next week, Oil ministers from the Organization of Petroleum Exporting Countries and other major producing countries will meet in Vienna on Thursday to decide whether to extend their current production agreement beyond a March 2018 deadline.
Market analysts forecast that the oil cartel would extend output cuts for a further nine months until the end of next year.