• Asian markets higher ahead of Biden-Xi talks.

  • Inflation a key theme, with both US and UK CPI expected to break lower.

  • US shutdown deadline provides risk, as Moody’s downgrades outlook on US credit rating.

Asian markets enjoyed a welcome boost overnight, with the Hang Seng pushing 1.3% higher over the course of the session. Coming ahead of Wednesday’s meeting between President Biden and Xi Jinping, there is a sense of optimism that we could see some headway made around US-China trade restrictions, Taiwan, and the conflicts in the Middle East and Europe. With China also set to release a host of key data points on Wednesday, there is likely to be significant degree of volatility for related markets and assets.

This week looks likely to be dominated by inflation, with both the US (Tuesday) and UK (Wednesday) reporting their latest CPI figures for October. Coming off the back of multi-month periods of stagnant or rising inflation, the expectation of a notable decline across both figures should help appease those calling for additional rate hikes in the coming months. With risk assets beginning the week on a positive footing, there is a good chance that we enjoy a period of strength across equity markets if the forthcoming inflation metrics further weaken the hawkish story as expected.

The US shutdown story looks to provide one reason for caution this week, with Congress faced with precious few days to pass a new stopgap bill before funding runs out after November 17. The House plan to vote on a stopgap proposal from Speaker Mike Johnson on Tuesday, which could help push funding into late January. However, Moody’s decision to shift the US credit rating outlook from stable to negative on Friday signalled a growing feeling that the country is becoming increasingly unstable under the weight of increased debt and ballooning repayment costs.

This material is a marketing communication and shall not in any case be construed as an investment advice, investment recommendation or presentation of an investment strategy. The marketing communication is prepared without taking into consideration the individual investors personal circumstances, investment experience or current financial situation. Any information contained therein in regards to past performance or future forecasts does not constitute a reliable indicator of future performance, as circumstances may change over time. Scope Markets shall not accept any responsibility for any losses of investors due to the use and the content of the abovementioned information. Please note that forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.

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