Developed market equities made gains last week and again pushed to record highs in many cases whilst emerging markets dipped. The American S&P 500 index added +1.3% despite weaker economic growth in Q3 than forecast. 
The US economy grew at only a fraction of the pace enjoyed in the first half of 2021 in the latest quarter. Gross Domestic Product expanded at only a 2% annualised rate, below expectations and down from 6.7% in the prior quarter. The lingering effects of the Delta variant of COVID-19 slowed the rebound in consumer spending and supply chain bottlenecks including a shortage of semiconductors impacted industries like autos where orders dipped notably. 
The European Central Bank (ECB) met on Thursday and eased market expectations of a European rate rise next year. The Bank continue to see medium to long term inflation below a 2% target, despite the latest Consumer Price Index reading in Europe at 4.1%. The Bank of Canada meanwhile chose to end its own bond-buying program and signalled rates could rise next spring. And seemingly on a very different path to the rest of the developed world, the Bank of Japan remains dovish after muted growth and inflation forecasts last week. Yesterday, Fumio Kishida’s Liberal Democratic Party won an outright electoral majority and is now expected to push through his economic stimulus plans. The Nikkei 225 index was broadly flat last week, though the Japanese Yen remained under pressure versus the US Dollar. 
Emerging and Asian equity markets saw losses last week. Troubled Chinese property developer Evergrande narrowly avoided defaulting on a Dollar bond on Friday when it made another last-gasp payment. Chinese property developer Modern Land become the latest company to default on a bond payment and property shares remained weak as a result. Tensions between the US and China have also resurfaced and weighed on sentiment, following a move in Washington to effectively ban China Telecom Corporation from operating in the US. Furthermore, disappointing results from two of the US tech giants, Apple and Amazon, led to share price drops from those in the supply chain in South Korea and Taiwan. The MSCI Emerging Markets index and the Hang Seng slipped -2.2% and -2.9% respectively. 
Key monetary policy meetings are scheduled on both sides of the Atlantic this week. The US Federal Reserve are likely to leave monetary policy unchanged on Wednesday, however investors will pay close attention to the Federal Open Market Committee statement as well as any commentary from Chair Jerome Powell for additional guidance regarding the Fed’s bond buying activities as well as any subsequent rate tightening. In the UK meanwhile, the recent rise in the 2 year Gilt yield points to a likely interest rate rise before the end of the year, however it remains to be seen whether such a move comes as early as this Thursday’s policy meeting or at the final meeting of the year in December. The Bank of England’s base rate currently stands at 0.1%.
In addition to a busy central bank calendar, this week brings a raft of new macroeconomic data. The first Friday of a new month brings the latest US Labour Report with 397,000 new job additions expected in the non-farm payrolls survey, following two months of slightly underwhelming data that undershot forecasts. The unemployment rate is expected to drop 10 basis points to 4.7%. In Europe, employment data is also due on Wednesday, followed by retail sales figures scheduled for Friday. Manufacturing, Construction, and Services sectors across Europe, the UK, and the US are also set for updated Purchasing Managers Index (PMI) readings over the course of the week, providing a gauge of business activity levels. 
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