Weekly Market Outlook | 27 – 31 Oct

The week of October 27–31 is shaping up to be a critical one for global markets, with major central-bank decisions, inflation and growth data releases, and key corporate earnings all converging.

In the United States, attention will centre on the Federal Reserve meeting and core inflation readings (including the Core PCE Price Index) as the economy continues to navigate data disruptions stemming from the government shutdown.

Across Europe, flash GDP and inflation data will offer insight into growth momentum, while the European Central Bank (ECB) is expected to reaffirm its current policy stance. In Asia, the Bank of Japan (BoJ) meeting and fresh inflation data could influence yen dynamics and regional sentiment. Meanwhile, commodity flows, trade narratives, and shifts in risk appetite remain important global backdrops.

Key Points to Watch 

• The Fed decision and commentary on quantitative tightening (QT) may alter rate-cut expectations.
• U.S. inflation (Core PCE) and employment-cost data could reshape Fed guidance.
• Eurozone GDP, unemployment, and inflation will test growth resilience and the ECB’s policy credibility.
• Japan’s BoJ meeting, Tokyo inflation, and political developments will be key drivers of yen sentiment.
• Commodity and trade dynamics—particularly oil prices and U.S.–China trade relations—remain wild cards for risk appetite and inflation.

United States: Inflation and the Fed in Focus

Markets are fixated on the Federal Reserve’s October 29 meeting, where a rate cut is widely anticipated. The minutes and accompanying commentary may provide clues on the potential timeline for ending QT.

The Core PCE Price Index, due October 31, will serve as the Fed’s preferred gauge of inflation. A stronger-than-expected reading could temper rate-cut expectations and bolster the U.S. dollar, while softer data may revive hopes for continued easing.

Additional releases, including Q3 employment-cost data and GDP figures, will further shape the market’s interpretation of the Fed’s policy path heading into November.

Europe & Eurozone: Recovery Faces a Test

Eurozone data releases in late October—including flash GDP, unemployment, and inflation—will determine whether the region’s fragile recovery can hold. The ECB’s policy stance, expected to remain unchanged at its October meeting, will be closely examined for any hints of adjustment.

Weak data could reinforce the case for prolonged accommodation, weighing on the euro, while stronger figures might lend support to the currency and reduce pressure for additional easing.

Japan: Yen, Policy & Politics

Japan enters a pivotal week with the BoJ policy meeting and Tokyo inflation data (CPI) in focus. Although inflation has edged higher, limited wage growth and political transitions, including new leadership, contribute to ongoing uncertainty.

The BoJ is likely to hold policy steady, but any hawkish tone could lift the yen, while dovish signals may weaken it and boost risk assets across Asia.

Global Themes & Commodities

Global markets remain sensitive to commodity price volatility, particularly in oil, which has risen amid supply constraints. At the same time, evolving U.S.–China trade dynamics continue to influence sentiment.

Although recent dialogue between the two nations has supported markets, structural issues — such as tech export controls and rare-earth supply tensions—still pose medium-term risks. With multiple central-bank meetings and key data releases scheduled this week, any surprises could prompt rapid market repositioning and heightened volatility.

Conclusion

This week could prove pivotal for Q4 market direction.

• If inflation remains sticky or central-bank communication turns hawkish, the U.S. dollar may strengthen while risk assets face renewed pressure.
  
• Conversely, softer inflation data or dovish signals could fuel rallies across equities, commodities, and non-dollar assets.

Investors should remain alert to event risks, data surprises, and central-bank cues as volatility is likely to stay elevated.