5 Important Developments to Follow This Week

Here are 5 important developments to follow this week. The Fed meeting is the most important highlight of the week.

Except for the FED (US Federal Reserve) meeting, the US economic agenda seems stagnant. Most other central banks will also meet during the week, including the Bank of Japan (BoJ) and the Bank of England (BoE). Here's what you need to know before starting the new week.

1. FED Will Gather

The Fed will begin its two-day policy meeting on Tuesday and will make a policy announcement on Wednesday. Investors will focus on the details of the central bank's plans to reduce its emergency stimulus program. The FED's economic incentive reduction calendar is important as it is the first step towards interest rate hikes. While many Fed officials said that the reduction could start this year, as FED Chairman Jerome Powell can tell, he emphasized that a rate hike is still far away. The FED may continue to act cautiously due to the economic uncertainty caused by the increasing number of cases and the weak jobs report in August.

2. US Economic Data

The U.S. data calendar will have housing figures. It is expected to stabilize after a small increase in mortgage approvals for home purchases in recent weeks. Housing starts and building permit data will be released on Tuesday, existing home sales on Wednesday, and new home sales on Friday. Market watchers will scrutinize Thursday's first jobless claims amid concerns that the economic recovery will be hurt by the Delta variant's surge in the current quarter.

3. Exchanges

The main factor that will determine the course of the stock markets next week will be the FED policy announcement on Wednesday. Apart from concerns about the possibility of tighter monetary policy from the Fed, stocks are also negatively affected by concerns that the Delta variant may slow economic growth and the expectation of a rise in corporate tax. In September, which was generally weak for the stock market, the S&P 500 index is down nearly 2% so far. Investors are also awaiting earnings reports from FedEx (NYSE:FDX), General Mills (NYSE:GIS), Nike (NYSE:NKE) and Costco (NASDAQ:COST). Nike shares took a hit last week after BTIG downgraded over supply chain concerns.

4. Central Banks Will Meet

Although the BOJ, which will meet on Tuesday and Wednesday, is not expected to make any policy changes, the bank may warn of increased risks to exports due to supply shortages. Norway's central bank on Thursday will be the first in developed countries to raise interest rates since the pandemic and may raise the main interest rate from 0% to 0.25%. The BoE is unlikely to change its policy at Thursday's meeting, but could make a statement as to whether it continues to think inflation is temporary.

5. Evergrande Reaches Critical Threshold

Urban planner Evergrande in debt has $83.5 million in bond interest payments due Thursday. Investors are priced by the high probability of default. The fact that such a small amount is the critical threshold for a $355 billion giant with over 1,300 units in China and over $300 billion in debt shows just how bad things have gotten. China's second-largest planner is trying to raise cash in its expanding business network by selling at a loss and selling shares in apartments, but with little success. Concerns that Evergrande might default on its debts are spreading to China's financial markets and even risk contaminating markets outside of China.         Source: Investing.com