Oil prices will react when markets open after an attack on a key Saudi production facility, amid uncertainty over how much global supply will be disrupted. Investors are also bracing for another interest rate cut from the Federal Reserve this week, as well as a flurry of rate decisions from other world central banks.
Oil set to jump after Saudi attack. Saturday’s attacks on key Saudi Arabia processing plants will test the world’s ability to handle a supply crisis as it faces the temporary loss of more than 5% of global supply from the world’s biggest crude exporter.
Fed set to cut rates again.
The Fed is widely expected to lower interest rates again at the conclusion of its two day policy meeting on Wednesday, in order to offset risks to the U.S. economy from trade tensions between Beijing and Washington, Brexit and a broad global slowdown.
Investors are pricing in a 78.5% chance of a quarter-point rate cut.
Central bank ‘Super Thursday’.
Thursday brings policy meetings in Japan, the U.K., Norway and Switzerland in the wake of Wednesday’s Fed decision and last week’s stimulus package from the European Central Bank.
The Bank of Japan is expected to keep interest rates unchanged unless the Fed decision jolts markets and triggers a spike in the yen. The Bank of England is not expected to make any changes, but its rate statement will be closely watched for any concerns over the economic fallout from Brexit.
Junior U.S. and Chinese officials meet in the coming week ahead of planned talks between senior trade negotiators in early October and investors will be on the lookout for any indications that relations between the two sides are thawing.
Economic data, earnings.
The economic calendar will bring an update on the health of the U.S. housing market, with reports on housing starts and existing home sales. Global shipping giant FedEx (NYSE:FDX), considered a bellwether for the U.S. economy, is due to report earnings on Tuesday.
In the Eurozone, a report on Germany’s ZEW index on Tuesday will offer more insight on whether the bloc’s largest economy is on track for a recession after contracting slightly in the second quarter.
The U.K. is to release data on CPI, while Canada is to report on CPI and retail sales.
Trader Georgi Bozhidarov