Yen nears a one-year low as dollar strength persists

S&P 500

Wall Street dropped for the second straight month, with the S&P 500 posting its biggest monthly loss in September since December last year. However, energy stocks were the only sector that finished higher, as oil prices have been hovering above $90 a barrel. In APAC, Japan outperformed the region. Stocks were boosted by JPY weakness.

Bank of Japan

A Business confidence among major Japanese companies continued to improve in the third quarter, according to the latest Bank of Japan (BOJ) Tankan survey. The reading of the key index improved to 9 from 5 three months earlier, up for the second straight quarter and better than expectations.

Hong Kong and mainland China indices

In China, factory activity expanded at a slower pace in September, according to Caixin Purchasing Managers index (PMI) data unveiled on Sunday. The private sector survey fell to 50.6 in September from 51 in the previous month, missing analysts' forecasts of 51.2. On Saturday, the official NBS PMI showed factory activity expanded for the first time in six months in September. There was no reaction on the market today as both the Hong Kong and mainland China indices are closed. Hong Kong will reopen tomorrow, but other Chinese stock exchanges will remain closed for the rest of the week.

The UK house price index

In the UK, the nationwide house price index remained flat in September compared to August. Economists have anticipated a 0.4% drop. On an annual basis, the index fell by 5.3%, the same as in August, compared to expectations for a 5.7% fall.

Eurozone unemployment

Later, at 10 a.m., eurozone unemployment Economists expect the rate to remain at 6.4% in August. And at 3 p.m. this afternoon, ISM Manufacturing Purchasing Managers' Index (PMI) is expected to remain in contraction territory for an 11th consecutive month. 47.7 is what the market expects for September, a marginal improvement on the 47.6 recorded in August.

The Reserve Bank of Australia

Some central banks are due to decide on rates this week. Starting on Tuesday with the Reserve of Bank of Australia (RBA). The market sees no change, and the cash rate should remain at 4.1%. That said, a recent uptick in inflation has led economists to believe that another rate hike could happen before the end of the year. Reserve Bank of New Zealand (RBNZ) on Wednesday is also expected to stay at 5.5%. Inflation is still decelerating in the country, and the official position is that rate increases have yet to be transmitted to the broader New Zealand economy.

US employment data

US employment data will keep the market on its toes throughout the week Job Openings and Labor Turnover Survey's (JOLT) job openings will be released on Tuesday afternoon and are expected to remain broadly unchanged from last month, when they fell to their lowest since May. 2021. On Wednesday, Automatic Data Processing (ADP) employment change is expected to slow for a third straight month. 160,000 job creations in the private sector are forecast, after 177,000 in August. And on Friday, we'll get September non-farm payrolls.

There too, job creation is forecast to slow down. Early expectations are for 163,000 dollars to be added to the US economy. Looking at all these forecasts, economists believe that the labour market is now well under way and that the Federal Reserve (Fed) tightening policy is doing its work.

UK retail sector

This week will be very quiet on the corporate front, yet here in the UK, focus will be on the retail sector again, with a series of corporate reports. On Tuesday, Greggs will release its trading statement for the third quarter and Boohoo.com's half-year earnings. On Wednesday, Tesco will also post its earnings and revenue for the first half of its exercise. Thursday, trading statement from Imperial brands, and Friday, full-year earnings from pub chain JD Wetherspoon.

Baker Hughes

Last Friday, Baker Hughes total rig count fell by seven to 623. A drop is due mostly to oil rigs in operation. The number of functioning oil rigs fell by five to 502, a new 19-month low. OPEC+ members are due to meet midweek. Saudi and Russian supply cuts are expected to keep feeding into stronger oil prices, with supply cuts likely to be extended into 2024. Neither country wants to see prices fall while they have to manage higher government expenditures.

A Reuters survey of 42 economists and analysts posted on Friday shows that they now forecast Brent oil prices to average $84.09 a barrel in 2023, up from August's consensus of $82.45. Brent has averaged around $81.94 so far this year.