Market Expectations Point to ECB Rate Hike Amid Rising Inflation

The past week saw US equities edge higher despite mixed labour market data. The ISM Manufacturing PMI remained in expansionary territory at 54.6, while nonfarm payrolls showed US employers added 162,000 jobs in August, exceeding forecasts.

In the Eurozone, headline inflation accelerated to 3.3% in August from 2.9% in July, primarily driven by energy inflation. In contrast, China's official Manufacturing PMI rose from 49.2 to 49.8, beating expectations but still below expansionary territory.

This week, investors will focus on US CPI and the European Central Bank's (ECB) rate decision. Markets expect the ECB to raise rates as inflation remains above target and economic growth continues to show resilience.