It had truly been an earnings-led week as equity markets fluctuated to the tune of corporate earnings performances. Likewise for the Asian region, sentiment had similarly been influenced. Into the week’s close, we have also seen the US dollar index exhibiting a strong upswing on EUR weakness with US Q3 GDP still up ahead.
A packed week
The fresh week is expected to find earnings remaining centrefold for equity markets as 26% of the companies on the S&P 500 index update their Q3 performance, while earnings beyond the US continue streaming in. It would likely be a telling week for the Q3 earnings season as three-fourths of the companies on the comprehensive S&P 500 index would have delivered their results by the end of the week. Mixed performances relative to the previous season have been seen thus far with earnings outperforming in percentage terms while sales lagged.
Besides earnings guidance, markets would also find back-to-back central bank meetings from major central bank including the Bank of Japan, Federal Reserve and Bank of England dominating investors’ attention. Specifically for the Federal Open Market Committee (FOMC) meeting, no interest rate changes are expected, nor will there be any economic projection or press conference. Recent economic data certainly does not warrant any changes in monetary policy views either. This may render the revelation of the next Federal Reserve chair a more important event for markets, expected by 3 November. The current consensus appears to point to a coin toss between Fed governor Jerome Powell and economist John Taylor. A result reflecting the latter may certainly propel the US dollar further in its recovery. One to watch for. On a side note, the market will also be monitoring President Donald Trump’s tax bill in the week ahead.
Data is expected to play no small part in shaping trade next week, particularly with US October non-farm payrolls (NFP) due. The figure is expected at a stronger 310k addition based on Bloomberg’s survey as the data emerge from the shadows of hurricane impact. Do also keep an eye on average hourly earnings performance after September’s surge. Ahead of the labour updates, October’s conference board consumer confidence index and ISM manufacturing will also be released on Tuesday and Wednesday respectively.
Asian markets would find the routine updates at the fore of the month, welcoming PMI numbers that would serve as key leading indicators for the economic situation in Asia. China’s official and private Caixin PMI gauges would arguably be the highlight for markets in the region. Economists have pencilled in expectations for a slight moderation in October NBS manufacturing PMI, likely attributed to the regulatory grip surrounding the 19th Party Congress. After the strong print in September, markets may accept some slack in the figures while any outperformance would be a bonus jolt to Asian bourses.
Other-1 data expected in the region includes Taiwan’s Q3 GDP on Tuesday and also inflation updates from the likes of South Korea, Thailand and Indonesia on Wednesday. For the local Singapore market, early PMI numbers will be also seen Thursday after the market close. Earnings report from the second of the three big banks, UOB Ltd. would be the key corporate update.