8 min readWeekly recap:
U.S. stock markets pulled back from record highs at the start of November as AI enthusiasm cooled amid concerns over valuations. Corporate earnings were strong, and AI spending showed no signs of slowing, suggesting the pullback reflects sentiment and valuation adjustments rather than a sell-off driven by corporate fundamentals. CEOs of US investment banks warned over the likelihood of a correction. The Nasdaq 100 saw its worst weekly decline since April.
The US government shutdown meant US data was once again in short supply. The focus was on private US data, with ADP payrolls rebounding to 42k. However, the Challenger report showed that 153k jobs were cut in October, the highest level for that month in 2 decades, raising concerns over the deteriorating US labour market. The USD declined across the last week, while Gold was unchanged.
US Government to reopen?
The US government shutdown is entering its 40th day of political gridlock, but the longest government shutdown in US history could end soon.
With flight cancellations rising and as the key Thanksgiving holiday approaches, there could be greater motivation to reach a deal. Reportedly, Senate Democrats have signaled a readiness to advance bipartisan spending bills to end the record-long shutdown, which has furloughed 75k federal workers, disrupted key services, and withdrawn liquidity from the market. The news is boosting sentiment, and once open, the rise in liquidity could lift stocks such as the Dow Jones Industrial Average. How quickly the US data will be released once the government is reopened is unclear.
China CPI (Sunday)
China’s consumer price index (CPI) unexpectedly rose in October as holidays during the month boosted travel, food, and transport demand. CPI rose 0.2% from a year earlier after falling 0.3% in September. Expectations had been for a 0.1% drop. Service costs edged up 0.2%, after a 0.3% decline in September, and contributed to the rise in inflation.
However, this uptick has been firmly attributed to a holiday boost; in other words, deflationary pressures remain entrenched. Factory gate deflation also eased, although it persisted for a 37th straight month. PPI fell 2.1% year on year compared with a 2.3% drop in September. The Hang Seng is rising at the start of the week.
US ADP 4-week average (Tuesday)
Given the US government shutdown and the shortage of U.S. data, private payroll report provider ADP’s private payrolls are more in focus than usual. Data from ADP payrolls last week showed a recovery in the labour market, with private payrolls rising by 42,000 after falling by 32,000 the previous month. The market will be looking towards the ADP employment change for the 4-week average, which will be released on Tuesday, and isn’t usually a macro report that would catch the market’s attention.
However, given the lack of data, any figures on the US labour market are in focus. The previous release showed a rise of 14.25K. A lower four-week average would support the view that the US labour market is deteriorating and could raise worries over the outlook for the economy, particularly given the shutdown, which in itself is expected to harm the economy and could pull US stock indices and the USD lower.
UK jobs data (Tuesday)
UK jobs data will be in focus amid rising concerns about a deteriorating labour market outlook. Unemployment is expected to increase further to 4.9% up from 4.8% previously, and is up from 4% 12 months ago. The unemployment rate could head towards 5% by the end of the year.
Meanwhile, wage growth has shown little sign of slowing, still trending around 4.7% with public sector pay contributing the most to this number. This number is inconsistent with a CPI of 2%, the BoE’s target. In the November BoE meeting, policymakers put emphasis on inflation data. Wage data could provide some relief if a moderation is seen. The data will add some colour to the overall inflation picture. Furthermore, a larger-than-expected rise in unemployment or cooler-than-forecast wage growth could lift expectations of a BoE rate cut and pull GBP/USD lower.
German ZEW economic sentiment (Tuesday)
Expectations are for the German ZEW economic sentiment to improve in November, rising from 39.3 to 42.5. These figures come after economic sentiment increased in the previous month but fell short of expectations, weighed down by sluggish economic performance and further delays in the recovery in the eurozone’s largest economy. There were some signs of optimism, as the data suggested conditions were improving for exporters.
Should this trend continue, then sentiment could rise further. The data comes as other data points have also shown encouraging signs. The PMIs from Germany were upbeat, helping boost eurozone business activity to the highest level in almost two years. With inflation in the region at the target level, growth is the ECB’s key focus right now. The central bank is not expected to cut rates again this cycle. Stronger-than-forecast data could support a stronger growth outlook and lift EUR/USD.
UK Q3 GDP (Thursday)
UK Q3 GDP comes after the IMF downgraded its 2026 GDP forecast for the UK, whilst warning that the UK is likely to face the highest inflation in the G7 over the coming two years. The monthly GDP data showed the economy grew by 0.1% in August; however, July was revised lower to -0.1% with the service sector flat over the past two months. The main contributors to growth were healthcare.
That said, the recent UK PMI figures were stronger than expected, suggesting some resilience in the UK economy. The Bank of England remains divided over the growth outlook, with some policymakers, such as Alan Taylor, indicating that the UK is heading towards a recession and needs rate cuts now, whilst more hawkish members are more concerned with the elevated price risks. A stronger GDP reading could help boost the FTSE 100 towards record highs.
Chinese retail sales / industrial production (Friday)
Expectations are for industrial production and retail sales to slow in October, adding to concerns about the slowing economy. Economists expect industrial production to ease to 5.6% year over year in October, down from 6.5%. Meanwhile, retail sales are expected to decline to 2.7% down from 3% in the previous month. Weak spending has been a significant source of concern across the Chinese economy. The data comes after figures last week showed weakness in Chinese exports, which contracted in October, dropping 1.1% from a year earlier, as global demand failed to offset the slump in shipments to the US.
Together, these figures raise concerns about the outlook for the Chinese economy, which resilient exports have supported to date. Chinese external resilience is starting to falter amid high tariffs and global trade uncertainty, underscoring the need for Beijing to continue supporting domestic demand. Weak retail sales and industrial production could pull AUD/USD lower.
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