Morning Market Brief September 30, 2024

Here comes the fourth quarter

This week will bring the fourth quarter of 2024. Global equity markets are up over the year, benefiting from several central banks beginning to loosen monetary policy. These central banks will likely keep lowering interest rates while inflation continues to slow and economic growth remains relatively modest. Still, it’ll be important to monitor economic announcements as geopolitical tensions, still muted demand and the potential for inflation to go higher weigh on the outlook.

• S&P Global will announce Canada’s manufacturing sector activity for September on Tuesday. Manufacturing activity in Canada has contracted for 16 consecutive months, hurt by weak demand and low output. The weak manufacturing sector has taken a bite out of Canada’s overall economic conditions.
• South of the border, several critical announcements will be made this week, including US labour market data on Friday. The labour market has cooled off substantially in recent months, raising concerns about its health. This was a key factor in the US Federal Reserve Board’s decision to lower interest rates by 50 basis points at its September meeting.
• Looking around the globe, Europe’s inflation rate will be released on Tuesday, UK home prices on Wednesday, European services sector activity on Thursday and Mexico’s unemployment rate on Friday.
• It will be a relatively slow week for earnings announcements, but there are a few notable ones. Key earnings in Canada include MTY Food Group and Novagold. Notable earnings in the US include Nike and Constellation Brands.

While there is economic uncertainty heading into the fourth quarter, investors are hoping that ongoing central bank rate cuts might help boost economic activity and financial markets. In the meantime, with inflation and labour market risks persisting, financial markets could see some volatility.

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