Three markets to watch next week (24.09.2021)

4:42 PM September 24, 2021

Fed meeting is already behind us but central banks will remain near the top of the agenda next week, thanks to the ECB event. Apart from that, situation around Chinese Evergrande continues to be closely monitored by market participants as a potential catalyst for bigger market moves. Last but not least, members of the Japanese ruling party will choose a new leader on Thursday that will also become the new prime minister of the country. Be sure to watch CHNComp, US500 and EURJPY in the week ahead!


Potential downfall of Evergrande and resulting spillover effects remain the main risk for markets. A Chinese developer failed to make coupon payments on its bonds last week and has entered a 30-day grace period before it is officially considered to be in default. Indices from Europe and the United States managed to somewhat recover after a sell-off at the beginning of the week. However, this is not the case for the CHNComp index that continues to be pressured by the situation and has erased the majority of the recovery move already.


Somewhat hawkish message sent by the Federal Reserve this week did not trigger a major equity market repricing. Central bankers will stay high on the investors' priority list next week thanks to the ECB event. Chiefs of ECB, Fed, BoE and BoJ will participate in a panel discussion on Wednesday, 4:45 pm BST. While such meetings are rarely used to make policy announcements, discussion between 4 central bank chiefs is surely an event to watch.


EURJPY staged a big recovery by the end of the week as risk moods improved. The pair will get a few chances to move next week. Flash CPI data from the euro area will be released on Friday at 10:00 am BST. Market expects another acceleration with core price growth reaching 1.8% YoY. The biggest event for JPY this week is Liberal Party leadership vote on Thursday that will determine the country's next prime minister. However, the market impact of this event may be limited.


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