Recent weeks have been busy with several issues catching investor attention. The U.S. jobs report has gained importance, as the Federal Reserve has indicated it’s watching it more closely. Investors are also concerned about the escalating conflict in the Middle East, while the third-quarter earnings season is fast approaching. Additionally, there have been significant developments in China, which we discuss below.

 

Despite being the world’s second-largest economy, China’s growth has slowed to around 5% as it transitions from a government-led investment model to a more consumer-driven economy. Post-pandemic recovery hopes were high, with expectations that Chinese consumers would drive growth, but instead, borrowing and spending have decreased despite the central bank lowering policy rates.

 

The weak housing market has been a significant obstacle. Falling home prices have hurt consumer confidence, with nearly 90% of Chinese households owning their homes. Recent measures to address these challenges include interest rate cuts, stock market support, and reduced downpayment requirements, with officials showing a greater commitment to stabilizing the market and boosting economic activity.

 

While China still faces long-term issues like a shrinking population and geopolitical tensions, a stronger push from policymakers to revive consumer spending could support global growth and offer positive momentum for investors.

 

As we head into the long weekend, we want to wish everyone a Happy Thanksgiving! I am celebrating with relatives abroad, as I am sure many of you are travelling to see loved ones as well. For this week’s prediction, I predict many of us will be eating leftover turkey for lunch on Tuesday!