The main stock indexes in the US and Europe continued to strengthen yesterday, which was probably reflected by the continued decline in fears about the escalation of the Israeli conflict, which was illustrated by the decline in the prices of oil and also gold (as a safe harbor). In addition, the market also positively received inflation data from the Eurozone, which showed a stronger slowdown in inflation for October (to +2.9% y/y vs. expected 3.1%). Year-on-year inflation was the lowest since July 2021. Today’s Fed meeting with the monetary policy decision at 19:00 CET and Governor Powell’s subsequent press conference will be a significant factor for further market development. Imaginary market “bulls” will want to see a statement to the effect that the Fed may no longer raise interest rates (for example, due to the recent growth in bond yields and thus the tightening of monetary conditions, or geopolitical risk). Bears, on the other hand, would like to see continued rhetoric from recent sessions and the need to keep rates high for an extended period of time with the possibility open for further rate hikes. In any case, the market decline in recent weeks seems to have at least partially reduced the downside risk.
Even before the Fed meeting, the market will be watching data from the US labor market and PMI.
Qualcomm, Mondelez, CVS Health and PayPal will publish the results today.
Jan Šafránek, analyst
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