Investing.com -- With investors on tenterhooks over when global interest rates might start to fall, upcoming inflation data this week will be in focus. OPEC+ meets to discuss oil output cuts and data from China will give fresh insights on the economic outlook for the world’s number-two economy. Here’s what you need to know to start your week.
U.S. inflation data
On the heels of October's unchanged reading on consumer price inflation, markets will be hoping that another U.S. inflation report on Thursday will bolster the case for an end to Federal Reserve rate hikes.
The Fed’s preferred inflation gauge, the personal consumption expenditures price index, is expected to have risen 0.1% in November. The PCE index rose 0.4% in September, matching the rise in August.
The core reading, which strips out food and fuel costs and is considered a better gauge of underlying inflation, is expected to have risen 3.5% on a year-over-year basis.
Other economic data out during the week includes a consumer confidence index for November on Tuesday - October's reading showed a third straight monthly decline. There will also be the first revision of third quarter GDP, figures on new home sales for October, the weekly report on jobless claims and the Fed’s Beige Book.
Year-end rally?
Signs the U.S. stock market rally is broadening from the so-called Magnificent Seven of mega-cap growth and technology companies is bolstering investor hopes for a rally through year-end.
The Magnificent Seven group of stocks is made up of Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Nvidia (NASDAQ:NVDA), Meta (NASDAQ:META) and Tesla (NASDAQ:TSLA) and they collectively hold a 28% weight in the S&P 500 index. They make up nearly 50% of the weighting of the Nasdaq 100, which is up nearly 47% for the year to date.
Equities have risen sharply, with the broad S&P 500 advancing approximately 10% over the last three weeks, fuelled by falling Treasury yields and cooling inflation readings that could signal the end of Federal Reserve rate hikes.
Investors will get further readings of inflation and consumer confidence (see above) during the week, but stronger-than-expected data could spur a selloff in Treasuries, sending yields higher.
OPEC+ meeting
Oil fell on Friday, but prices notched their first week of gains in over a month ahead of a meeting later this week to decide on production cuts in 2024.
Brent crude futures settled down 1.4%, at $80.23 a barrel, while crude oil WTI futures fell 2.5%, from Wednesday's close to $75.17. There was no settlement for WTI on Thursday owing to the U.S. Thanksgiving holiday.
The gains for the week came as OPEC+ prepares for a meeting on Thursday that will have output cuts high on the agenda after recent oil price declines on demand concerns and burgeoning supply, particularly from non-OPEC producers.
The OPEC+ group, comprising of the Organization of the Petroleum Exporting Countries and allies including Russia, surprised the market last Wednesday by delaying its scheduled Nov. 26 meeting to Nov. 30 after producers struggled to reach a consensus on output levels.
Eurozone inflation
The Eurozone is to publish inflation data on Thursday that is expected to point to price pressures moderating again in November.
Consumer price inflation is expected to increase at an annual rate of 2.8%, easing slightly from 2.9% the prior month. Underlying inflation is expected to slow to 3.9%.
But despite indications that inflation is cooling, European Central Bank President Christine Lagarde has warned that borrowing costs will need to stay restrictive for longer.
Last Thursday, the minutes of the ECB’s latest policy meeting indicated that officials agree they should be ready to hike again if needed.
Inflation is only forecast to return to the ECB’s target of 2% in the second half of 2025.
China outlook
China is to release official purchasing manager indexes for November on Thursday, with investors on the lookout for any signs of a recovery in the world’s second largest economy.
In October data showed that factory activity fell back into contraction despite a raft of government measures aimed at shoring up the faltering economy, which has been hit by weak consumption and a crisis in the country's debt-laden property sector, which comprises around a quarter of gross domestic product.
China's economy grew at a faster-than-expected 4.9% in the third quarter, But Beijing still faces an uphill battle to achieve its annual growth target of around 5%.
--Reuters contributed to this report