Trade talks and monetary policy signals are likely to dominate the markets in the coming days. It remains to be seen whether the course will be set for a possible year-end rally.
The growing confidence in a major outcome in the trade dispute between Washington and Beijing is fueling the principle of hope on the markets. A failure of the talks or an intensification of the rhetoric would be a major disappointment.
The focus of the new trading week is likely to be on the Federal Reserve's Fed meeting and the ongoing reporting season.
Preliminary agreement in the trade dispute between China and the USA - investors are betting on a big win in the tariff dispute
According to the Chinese side, the USA and China have come closer together in the tariff dispute. Li Chenggang, China's chief negotiator, said that both sides had reached a preliminary agreement. However, both sides must now „go through an internal approval process“.
More than two weeks ago, Trump announced extra tariffs of 100 percent on Chinese imports, causing a temporary escalation of the trade dispute. The background to this was a dispute over rare earths. Despite the prospect of a resolution to the conflict, investors should be prepared for possible setbacks at any time. It remains unclear whether a final agreement will actually be reached. In this context, the advance praise that has already been awarded must also prove to be true.
Investors likely to bet on interest rate cut by US Federal Reserve
Consequently, the eagerly awaited US Federal Reserve meeting is on the agenda for Wednesday evening. While the key interest rate decision is expected at 19:00, Fed Chairman Jerome Powell is expected to address the public at 19:30.
According to the CME Group's „Fed Watch Tool“, there is a 96.7% chance that the key interest rate will be adjusted to a range of 3.75% to 4.00% on Wednesday. The interest rate band itself currently stands at 4.00 to 4.25 percent.
The GDP growth rate for the US is expected at 1:30 p.m. and should consequently provide economic clues.
European Central Bank meets on Thursday to decide on key interest rate
The key interest rate decision of the European colleagues from the ECB should also be noted. The interest rate decision is expected at 14:15 and the press conference with Christine Lagarde half an hour later.
Last but not least, important US price data will come into focus on Friday, which will be tapped for monetary policy clues (13:30). The core rate of personal consumption expenditure is expected.
US stock market heavyweights present their quarterly figures
Alphabet (ISIN: US02079K3059), Meta (ISIN: US30303M1027), Microsoft (ISIN: US5949181045) and, on Thursday, Amazon (ISIN: US0231351067) and Apple (ISIN: US0378331005) are expected to publish their figures for the past financial quarter in the middle of the week.
