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Week Ahead Preview 7th of November

Mahmoud Alkudsi Mahmoud Alkudsi 07/11/2022
Week Ahead Preview 7th of November Week Ahead Preview 7th of November
Week Ahead Preview 7th of November Mahmoud Alkudsi
Markets focus will be on the US congressional midterm elections taking place this week, as members in the house of representatives and the Senate will be up for election. Currently, Democrats control both houses with a narrow majority of 220 out of 435 seats in the former and 48 seats in the latter out of 100. Nonetheless, they count on the help of two independents who vote with them with Vice President Kamala Harris (Democrat) vote as the deciding vote.

The results of this election will be key for President Biden’s agenda on all aspects (political, economic, environmental, etc..) as his ability to pass budgets or any kind of legislation will be very limited if Republicans win the majority in either or both houses. Moreover, this election will show Americans’ satisfaction with the current administration’s policy (especially the fiscal one) and could have some major implications such as paving the way for the return of Trump’s candidacy to the presidential elections in 2024 or even putting the incumbent president’s candidacy for a second term at stake.

So how may markets react in any of only three scenarios?
 
  • The first, (a split congress) could have a negative effect on the equity markets, as it would keep them stuck in bipartisan issues and unable to pass much of fiscal incentives. Htis could aslo help the Federal reserves to bring inflation levels to the 2% target. 
 
  • The second, (Republicans win both houses) is like the first scenario as the Republicans could block Democrats’ attempts to pass public budgets easily. On the other hand, they may press to increase oil and gas production and increase energy exports.
 
 
  • The third, (Democrats win both houses) would be positive for the equity market as the administration will be able to carry on within the current agenda and provide fiscal support to the economy when needed . However, this would hinder the Fed in achieving its mission of bringing inflation levels to 2%.
 Most of the US indices closed in the red last week due to the Federal Reserve chairman’s affirmation of maintaining a tight monetary policy until inflation levels are broght down to the 2% target., However, the market rebounded higher on Friday after the job data showed an increase in unemployment rates from 3.5% in September to 3.7% in October. Investors welcomed this news as it could bring the US central bank closer to easing, given its focus on reducing the labor market’s demand which feeds inflation.

Economic data highlights 
 
Monday 7th of November 
 
  • CHF- Unemployment Rate (OCT)
  • EUR- Global Construction PMI (Germany-OCT)
  • USD- Consumer Credit Change (SEP)
 
 Tuesday 8th of November 
  • AUD- Consumer Confidence Index (NOV)
  • USD 2022 Midterm Elections
  • EUR- Retail Sales (SEP)
 Wednesday 9th of November  
  • CNH- Inflation Rate (OCT)
  • USD- Wholesale Inventories MoM (SEP)
 Thursday 10th of November 
  • USD- Core Inflation Rate (OCT)
  • USD- Inflation Rate (OCT)
  • ZAR- Gold Production (SEP)
  • ZAR- Mining Production (SEP)
  • ZAR- Manufacturing Production (SEP)
Friday 11th of November  
  • EUR- Inflation Rate Final (Germany- OCT)
  • GBP- GDP Growth Rate (Q3)
  • GBP- Industrial Production (SEP)
  • USD- Michigan Consumer (NOV)
  
 The US Iinflation Report    
 
 
On Thursday all eyes will be on the US CPI report (inflation) of October. Inflation rates in the US hit a 40-year high 40-year high at 9.1% in June, and since then the Fed started an ultra-tight monetary policy, hiking the rate by 75bp in every meeting. This led inflation levels to decelerate however, remained over 8%.

Markets expect the inflation headline to retreat from 8.2% in September to 8% in October, and the core inflation rate to fall to 6.5% hence, any higher-than-expected read, especially on the core inflation side, would increase the odds of another 75bp rate hike in December

 
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Meet our contributors
Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Lesego
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Lesego Mthombothi
Market Research Analyst, South Africa

Lesego Mthombothi is an experienced market research analyst and investment professional who proudly holds an honours degree in investment management and completed her CFA level 1.
 
 
 

Mahmoud Alkudsi
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Mahmoud Alkudsi
Chief Markets Analyst, MENA

Mahmoud is a market analyst, with over a decade of experience in financial markets. He follows main market movers and tracks their effect on the price chart. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and with his wide experience in providing educational and guidance materials to all levels of traders, he helps them in making informed trading decisions. Before joining ThinkMarkets, Mahmoud was head of market research departments in different reputed financial companies, where he provided market analysis for a variety of asset classes, including FX, equities, indices, and commodity futures. As an experienced market commentator, he was hosted by too many print and broadcast media, including not limited to Sky News Arabia, France 24, Alarabyia, Alsharq-Bloomberg, and CNBC Alarabyia to discuss key risk events their clear impact on the price action. Mahmoud holds a Master of Business Administration (MBA) from Cardiff Metropolitan University of Wales, UK, and speaks Arabic, English, and Spanish.

Shawn
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Shawn Lee
Market Analyst, Malaysia

Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.

Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.
Lesego
Lesego Mthombothi
Lesego Mthombothi is an experienced market research analyst and investment professional who proudly holds an honours degree in investment management and completed her CFA level 1.
Mahmoud Alkudsi
Mahmoud Alkudsi
Mahmoud is a market analyst with over a decade of experience in financial markets. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and has experience in providing guidance to all levels of traders.
Shawn
Shawn Lee
Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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