US and European equity traders enjoyed one of their best weeks so far this year with more easing from Beijing and hints for further loose monetary policy by ECB, sending stocks to their highest levels in two months. Tech giants also added to the rally with Alphabet (formerly Google), Microsoft, and Amazon all beating analysts’ expectations. Whereas in FX, US dollar bulls drove the currency higher against all its major counterparts.
The coming week is yet another busy one, with Federal Reserve, Bank of Japan, and Reserve Bank of New Zealand all due to meet, blue chips companies continue to announce Q3 results, and several tier 1 economic data to be released.
With the US dollar posting its best weekly performance in almost 5 months, all eyes will be looking at Wednesday FOMC rate decision. Although investors are indicating less than a 6% chance for October rate hike according to CME fedwatch, many policy makers still see 2015 proper to tighten monetary policy, and Janet Yellen suggested last month that the door is opened for October hike. However, September jobs data did not support this view with the U.S. economy adding only 142,000 jobs, wages stagnated, and consumers not spending enough.
Whether the U.S. dollar will hold on its previous gains depends a lot on economic data releases. New home sales, pending home sales, durable goods, consumer confidence, manufacturing, trade balance, personal income and spending are all to the US calendar next week, but traders focused on Thursdays GDP as growth most likely to slow down significantly from 3.9% recorded in Q2.
The earning calendar is also heavy the week ahead. The world’s biggest company, Apple, will reveal its quarterly results after the closing bell on Tuesday. Whether it will follow its peers and beat analysts’ expectations depends widely on how sales in China is effected amid recent economic turbulence.
Here’s a list of economic data (GMT) & earnings releases to watch:
Monday 26 October
9am – German IFO (October): expected to fall to 106.1 for the business climate index, while expectations weaken to 101.9 from 102.2.
2pm – US new home sales (September): expected to fall to 550K from 552K last month, with the annual rate shrinking by 1%.
Earnings: Luxottica, Broadcom, Xerox
Tuesday 27 October
9.30am – UK GDP (Q3, preliminary): forecast to fall to 2.2% YoY from 2.4% and to 0.5% QoQ from 0.7%.
12.30pm – US durable goods orders (September): forecast to drop by 1.5%, from last month’s 2.3% fall (inc. defence & transportation).
1.45pm – US flash services & composite PMI (October): services PMI expected to be 55.56 for the month, just up from 55 in September.
2pm – US consumer confidence (October): the Conference Board’s index is expected to fall to 102.5 from 103.
Earnings: Apple, Twitter, Novartis, Pfizer, Alibaba, Comcast, BP, Merck, Ford Motor
Wednesday 28 October
12.30am – Australian CPI (Q3): forecast to be 1.3% from 1.5% YoY, while the QoQ falls to 0.5% from 0.7%. Market to watch: US indices, USD crosses
2.30pm – US crude oil inventories: expected to rise by 1.1 million barrels, from 8 million in the previous week. Market to watch: US light crude
6pm – Federal Reserve decision: no change on rates is expected, since there is no press conference with this meeting. Current market expectations suggest there is less than a 6% chance of a move at this meeting. However, the statement will be worth reading.
Earnings: Amgen, GlaxoSmithKline, Modelez, Walgreens Boots, VW, Deutsche Bank
Thursday 29 October
8.55am: German unemployment (October): expected to rise by 6000 from 2000 in September, while the unemployment rate holds at 6.4% for the month. Market to watch: DAX, EUR crosses
12.30pm – US GDP (Q3, preliminary), initial jobless claims: GDP is expected to grow by 1.7% over the quarter, from 3.9% in Q2, while jobless claims rise to 263K from 259K last week.
1pm – German inflation (October, preliminary): expected to rise to 0.2% YoY from 0%, and to 0.3% MoM from -0.2%.
2pm – US pending home sales (September): forecast to rise by 0.8%, from -1.4% in August.
11.30pm – Japanese CPI, unemployment (September): forecast to be 0.1% YoY from 0.2% in August, while the unemployment rate holds steady at 3.4%.
Earnings: Starbucks, Royal Dutch Shell, Total, ConocoPhillips, Sanofi, MasterCard, Bayer, Time Warner Cable, CME Group, Barclays, LinkedIn, ICICI Banks, Aetna
Friday 30 October
3am – BoJ meeting: there is speculation that the BoJ might do more in stimulus terms, although the finance minister has recently voiced his scepticism about the impact of such a move.
10am – Eurozone inflation (October, flash estimate), unemployment (September): this first estimate is expected to see prices rise by 0.1% YoY, while core inflation (which excludes food and fuel) increases by 0.98%. Unemployment is expected to hold steady at 11% in September.
2pm – US Michigan consumer confidence (October, final): expected to rise to 92.3 from October’s previous reading of 87.2.
Earnings: Exxon Mobil, Chevron, Anheuser-Busch Inbev, AbbVie, BG Group, Imperial Oil, Royal Bank Scotland