Look ahead 31/10/23: BoJ rate decision; France, Euro Zone Q3 GDP; BP earnings

(Video Transcript)

Busy day ahead for Japan

Hello, I'm Angela Barnes and welcome to your Look Ahead to Tuesday 31 October 2023. Starting with Japan, where we have a raft of data to keep across, including industrial production, retail sales, consumer confidence data, plus an interest rate decision from the Bank of Japan (BoJ).

Board members have kept the central bank's policy rate at less than zero while their peers have been raising interest rates. And if we look at the Japanese yen-US dollar price chart, the Japanese yen has spent the past month in a tight range between 148 to 150 to the dollar.

And depending on what it decides at the meeting, the Bank of Japan could cause the yen to swing or trigger a yen-supporting intervention by the Ministry of Finance.

The Japanese central bank currently caps the benchmark 10-year bond yield at 1% and intervenes if this threshold comes under pressure, but market talk at the moment suggests that the BoJ may allow market yields to rise to 1.5%, a hawkish twist and one that would strengthen the yen, analysts are predicting at IBM and DailyFX.

China's GDP data will show if economy is recovering

Moving on now to China, because on Tuesday we also have the MBS manufacturing and non-manufacturing purchasing managers’ index (PMI) data. The data will follow recent third-quarter GDP figures, which will indicate whether China's recovery, this most recent data, is gaining momentum or not.

in France, we will have Q3 GDP figures with a preliminary estimate of 0.1% growth quarter-over-quarter, that would be down from 0.5% in Q2. Meanwhile business sentiment suggests that a rebound in the fourth quarter is unlikely weighed down by a sharp global economic slowdown.

And if I just pull up the France 40, France's CAC 40, here price chart, it's up today at 0.43%, but since the end of July it has declined about 8%.

Retail sales figures due for Germany

And then moving on to Germany, because it will be releasing retail sales for September. This will provide more insight on how consumers are spending in Europe's largest economy, despite high inflation, sales are forecast to rise by 0.5% month-over-month.

And if we look at Germany's DAX price chart, also marginally higher today, just up 0.05%. However, it is off its July highs and back at the low levels seen in March this year, around 14,676 points.

The consensus for Tuesday's third-quarter Euro Zone gross domestic product (GDP) print is expected to come in at 0.30% quarter-on quarter. It comes after the European Central Bank (ECB) held off raising interest rates last week for the first time in 15 months as evidence amounts of a deepening economic downturn in Europe and geopolitics continues to cloud the outlook.

Moving on to the US where investors will also be keeping across a raft of data as we move from there, including S&P cash to their home prices, Chicago PMI, TV consumer confidence and API crude oil inventory data.

WTI, Brent both down almost 2%

If we pull up the WTI US crude oil price chart, it's actually fallen down substantially today, nearly 2% trading around $83 a barrel. Brent is also down nearly 2% as well, trading in the red, and since the end of September crude is down about 10% after peaking at around $94 a barrel.

Moving on to UK earnings, we've got Q3 earnings from BP too. Data from Reuters shows that analysts expect BP's Q3 revenue to decrease by 9.4% to $49,855 billion year on year, and its earnings per share by 55.8% 24 cents when it reports its results on Tuesday.

If we just pull up the BP price chart, the share price is down today 0.27% ahead of the earnings update, so it's gained about 11% since the start of this year. We'll also have Q3 earnings from Stellantis, coming after the maker of Chrysler struck a tentative pay deal with the United Automobile Workers (UAW) union to end a six-week strike.

The agreement still needs to be approved by union leaders and members, and it follows a similar deal that was struck with Ford last week. Other earnings to watch from the US include Q3 results from Pfizer, AMD and Caterpillar.

Well, that's your Look Ahead for Tuesday 31 October. Thank you very much for watching. Do keep across all our IG platforms for market analysis and updates throughout the week.