FUNDAMENTAL REVIEW FOR THE WEEK (11 - 15 November 2024)

The current week will be a "respite week" after the eventful and key events of the past financial five-day period. Let us recall that the leading American indices demonstrated significant growth over the past week, with many of them updating their historical maximums.

Investors responded with optimism to the victory of Republican candidate Donald Trump in the US presidential election. In addition, stocks received additional support due to the latest easing of monetary policy by the Federal Reserve.

Small- and mid-cap stocks showed the highest growth rates. If we break it down by category, the best results were demonstrated by the industrial sector (+6%), the technology segment (+5.7%) and the consumer goods sector (+5.7%). Less growth was observed in the healthcare (+1.2%) and raw materials (+1.2%) sectors.

What events to pay attention to

The upcoming week is expected to be an important, but fairly predictable economic backdrop, focused on key inflation indicators in the US. The main focus will be on CPI inflation data on Wednesday and PPI on Thursday, as well as the retail sales report on Friday.

At the regulator's meeting on Thursday, Fed Chairman Jerome Powell noted that the low base of 2023 could lead to an increase in inflation in the fourth quarter due to technical factors, which will not cause a significant reaction from the Fed. Powell emphasized that January is traditionally not taken into account, since companies adjust prices. The first true inflation figure is expected in February 2025, and the Fed forecasts a sharp drop in inflation, which justifies the current interest rate cut.

However, Powell's comments about the low base of last year could affect the annual inflation figures, which makes the monthly data especially important. For consumer prices, the forecast is neutral so far: 0.3% for the last month for the base indicator. Recall that higher than expected data is seen as positive/bullish for the USD, while lower than expected data is negative for the USD. A deviation in one direction or another can affect the local trend for the dollar within a week.

Of the other economic reports, it is worth paying attention to the UK. The market is barely factoring in the likelihood of a rate cut by the Bank of England in December, especially against the backdrop of the upcoming presentation of new fiscal stimulus by the British Chancellor. The important block of data from China on Friday will be retail sales, which will show the success of the CCP in stimulating domestic demand. This is especially relevant against the backdrop of Trump's return with tariffs.