TOP 5 economic news for the week - TeleTrade exclusives

This week, the market is preparing for the most important meeting of the US Federal Reserve System. Comments by Fed Chairman Jerome Powell are likely to play a key role in expectations regarding a possible interest rate cut by the US central bank.

Chinese officials have promised to make more efforts to provide fiscal and monetary support. All the most interesting things are in our top.

Futures are traded flat

US stock futures showed reduced activity on Monday, while investors were waiting for the long-awaited Fed meeting at the end of the week.

Both the benchmark S&P 500 and the tech—heavy Nasdaq Composite reached their highest closing levels since early 2022 in the previous session, while the Dow Jones posted its sixth consecutive weekly gain - the longest streak of positive weekly results since 2019.

The US labor market data released on Friday reinforced hopes that the Fed will be able to provide a so-called "soft landing" for the country's economy. In such a scenario, a sharp series of interest rate hikes by the central bank will be able to suppress rising inflation without causing a broader economic collapse.

Data showed that in November, the number of people employed in the US non-agricultural sector increased more than expected, average hourly earnings increased on a monthly basis, and the unemployment rate decreased.

Forecast from Goldman Sachs on Fed rates in 2024

Goldman Sachs analysts predicted that Fed policymakers would cut interest rates twice before the end of next year, and postponed the expected timing of the first cut to the third quarter.

Referring to the best news on inflation, the brokerage company said in a note to clients dated December 10 that the rate cut may now occur a little earlier than December 2024.

After the release of employment data last week and separate data indicating the slowest annual growth in base prices in 2 years in October in the United States, the market now estimates the probability of a rate cut by a quarter point from the current range of 5.25% to 5.50% in May. The probability of a rate cut at the Fed's March meeting is slightly less than 43%, compared with 53% the previous week.

The main attention will be focused on the comments of Fed Chairman Jerome Powell, as he is under pressure to determine the timing of a future rate cut. Powell stressed that the Fed would act cautiously.

Cigna refused to merge with Humana

The American insurance company Cigna has abandoned plans to acquire a similar company Humana, according to numerous media reports, putting an end to a deal that would have led to the creation of an insurance giant worth more than $140 billion.

The reports say that neither Cigna nor Humana were able to agree on financial terms. In the past, antitrust authorities have already stopped such attempts to consolidate the American health insurance industry.

The rejection of the negotiations occurred at the moment when Cigna, based in Connecticut, announced its intention to conduct a $10 billion share buyback. In a statement, Chairman of the Board of Directors David Cordani argued that the company's shares are significantly undervalued and the buyout represents a value-enhancing capital placement.

Chinese stocks show mixed growth

China's Shanghai Shenzhen CSI 300 blue chip index rose 0.6% on Monday after hitting its lowest level since early 2019, while the Shanghai Composite rose and Hong Kong's Hang Seng fell 0.9%.

Data released over the weekend showed that Chinese consumer prices fell at the fastest pace in 3 years in November, in particular due to lower food prices. Producer prices also declined for the 14th month in a row.

The data suggests that the recovery in Chinese spending after the pandemic remains weak, despite Beijing's ongoing liquidity measures. This trend does not bode well for the world's second largest economy. China has been in the deflation zone for 2 months in a row, which portends a slight acceleration in growth in the coming months.

Officials promised to make more efforts to provide fiscal and monetary support, and Chinese leader Xi Jinping warned that the country's economic recovery is at a critical stage.

Oil prices have decreased

Oil prices fell slightly on Monday, which indicates the caution of traders ahead of the Fed meeting.

The price of Brent expiring in February decreased by 0.3% to $75.59 per barrel, and the price of West Texas Intermediate fell by 0.4% to $71.17 per barrel.

Crude oil prices suffered losses for 7 consecutive weeks after disappointing production cuts by the Organization of the Petroleum Exporting Countries and its allies, including Russia. Weak economic data from the main importer, China, also increased concerns about demand.

However, strong data on employment in the US non-agricultural sector on Friday inspired some optimism about the prospects for demand for crude oil in the world's largest importer of fuel.

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