Week Ahead: Risk rally runs into more questions

Markets seem dominated by data at the moment, that is the complete lack of it as both policymakers and investors fly blind as concerns mount about even the December FOMC being impacted. The US government shutdown is now the longest in history with betting markets currently seeing a 62% chance of it lasting beyond November 15. The jobs data we have seen recently has been mixed with ADP surprising to the upside and announced job cuts showing the sharpest rise in layoffs since the pandemic. The latter is a concerning signal and indicator for future employment data.

Last week, we mentioned bullish seasonals into year-end for stocks but caveated that with a big question around the hawkish Fed rate cut, mixed earnings reaction to big tech and the (only) expectations-matching Trump-Xi Summit. Interestingly, tech stocks suffered their worst week since April as investors finally started worrying about sky-high valuations. We have talked a few times previously about the circular AI financing flywheel, the ‘hot potato’ AI capital, with some commentators even calling it a Ponzi scheme. Certainly, AI-related investment and capex are increasingly debt-financed while questions around ROI for the end users and enterprises appear to be getting louder.

With data last Friday showing waning consumer confidence in the world’s biggest economy, plus those signs of weakness in the labour market, we are on guard for less dip buying while fund managers lock in decent gains for this year. We’ll also be watching the performance of more speculative areas of the market to see if they stay buoyant or succumb to more selling. That would mean more defensive sectors may need to outperform in order to drive the broader market higher. We note that last week saw both the broader S&P 500 index and the tech-heavy Nasdaq bounced off their 50-day SMAs.

In Brief: major data releases of the week

Tuesday, 11 November 2025

– UK Jobs: Unemployment is forecast to tick up one-tenth to 4.9% while average earnings (ex-bonus) are expected to ease one-tenth to 4.6%. The BoE’s focus is back on inflation, with the speed of wage growth predicted to cool. That may help a deeply divided MPC cut rates next month, with markets currently seeing around a 60% of a 25bps move.

Thursday, 13 November 2025

– Australia Jobs: Expectations are for headline jobs to print around 20k, stronger than the prior 14.9k. Unemployment is forecast to move one-tenth lower to 4.4%. Employment growth has been easing as economists cite a rebalancing across industries.

– UK GDP: Consensus expects a reading of 0.1% growth in the third quarter. This has moderated from the stronger first half of 2025, which was boosted by tariff frontloading. Growth in the new year is predicted to slow as government spending slows.

Friday, 14 November 2025

– China Data: Retail sales are seen easing to 2.6% y/y as the impact of the trade-in policy gradually fades. Soft confidence is set to keep investment subdued, though industrial production is expected to continue to outperform.

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