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Top 5 Things to Watch in Markets in the Week Ahead

EconomyOct 10, 2021 06:12AM ET
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© Reuters

By Noreen Burke

Investing.com -- Third quarter earnings season kicks off this week with JPMorgan Chase and other big banks reporting. Figures on U.S. inflation will be closely watched while the Federal Reserve is set to publish the minutes of its September policy meeting, during which officials said they would begin stimulus tapering by the end of this year. The International Monetary Fund and the World Bank are to start their annual meeting on Monday, but a controversy over IMF chief Kristalina Georgieva has already overshadowed proceedings. In the UK, data releases will focus attention on the health on the economy amid growing expectations for rate hikes as inflationary pressures mount. Here’s what you need to know to start your week.

  1. Bank earnings

Some of the world's biggest banks kick off U.S. earnings, with investors focused on global supply chain problems, labor shortages and the upcoming tapering of the Fed's $120 billion monthly stimulus.

JPMorgan Chase (NYSE:JPM) and BlackRock (NYSE:BLK) report on Wednesday followed by Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) later in the week.

Banks smashed profit estimates in the second quarter as the economy rebounded, with Wells Fargo, Bank of America, Citigroup (NYSE:C) and JPMorgan Chase posting a combined $33 billion in profits.

That momentum likely slowed in the third quarter; earnings for financials are forecast to grow by 17.4%, versus nearly 160% in Q2, according to I/B/E/S data from Refinitiv.

"I think it’s going to be a dicey earnings season," warned Liz Young, head of investment strategy at SoFi in New York. "If supply-chain issues are driving up costs, a company with strong pricing power can pass through those rising costs. But you can’t pass through a labor shortage if you can’t find workers to hire."

  1. U.S. data

The key U.S. economic report to watch this week is Wednesday’s data on consumer price inflation for September. While the rate of price increases has moderated inflation is still higher than it was pre-pandemic with the surge in demand after the economy reopened pushing up prices.

Economists expect the consumer price index to match August’s 0.3% monthly increase and the 5.3% annual gain.

Producer price inflation figures are due out on Thursday, followed by data on retail sales on Friday. Retail sales are expected to be pulled lower because of a plunge in vehicle sales amid supply chain bottlenecks, but excluding vehicles, retail sales are forecast to increase.

  1. Fed minutes

The Fed is to publish its September meeting minutes on Wednesday amid expectations that it will begin tapering asset purchases before the end of this year, an important first step towards eventual rate hikes.

Friday’s weaker-than-expected September jobs report did little to alter expectations the Fed could begin to scale back stimulus by the years end.

Though the economy added just 194,000 jobs in September upward revisions to prior months' data meant that all told the economy has now regained half of the jobs deficit it faced in December, compared with pre-pandemic employment levels.

Fed Chair Jerome Powell said last month that he'd only need to see a "decent" September U.S. jobs report to be ready to begin to taper in November.

  1. IMF, World Bank annual meetings

Annual meetings of the World Bank and the IMF get underway Monday, where officials will discuss the global economy, the ongoing COVID-19 pandemic and global taxation issues.

But the high-profile event has been overshadowed by a data-rigging scandal that threatens the career of IMF managing director Kristalina Georgieva.

It has been alleged that Georgieva pressured World Bank staff to change data to favor China in 2017, when she was the chief executive of the bank.

The allegations – strongly denied by Georgieva - will cast a cloud over the fund's initiatives to aid the world's post-pandemic recovery.

A decision on Georgieva's future at the IMF is not expected until Monday, at the earliest.

  1. UK data

With the UK economy showing signs of slowing amid rising prices, supply chain disruptions and staff shortages, upcoming economic data releases will grab the spotlight.

On Tuesday, the claimant count change for September is published, together with August unemployment and wage data. GDP data for August will be released on Wednesday, alongside industrial and manufacturing data.

Markets are betting the Bank of England might become the first major central bank to raise rates since the pandemic struck.

On Saturday BoE official Michael Saunders said in an interview in the Telegraph newspaper that households should get ready for "significantly earlier" interest rate hikes as inflation pressure mounts.

-Reuters contributed to this report

 

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (6)
Modern Matrix
Modern Matrix Oct 10, 2021 8:41PM ET
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supply chain, jobs numbers, bedt ceiling blah blah blah.
AYYAN RAHAM
AYYAN RAHAM Oct 10, 2021 11:16AM ET
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help me friend my trade in a losses against gbpjpy sell but it's gain more can you help me
yusia ade tama
yusia ade tama Oct 10, 2021 11:16AM ET
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do you not use stop loss?
yusia ade tama
yusia ade tama Oct 10, 2021 11:16AM ET
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do you not use stop loss?
Waqar Aslam
Waqar Aslam Oct 10, 2021 10:53AM ET
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Thanx
michael engel
michael engel Oct 10, 2021 6:58AM ET
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Inflation : the bubble had happened before, when gold rose from $255 in Feb 2001 to  $1,911 in Sept 2011. Cap & handle bs : a Lazer at the bottom aim @ $ $600 - $700. That's ==> deflation !!
what ever
permaNOTHING Oct 10, 2021 6:58AM ET
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doesn't make sense. try again
Shawn Pewitt
Shawn Pewitt Oct 10, 2021 6:58AM ET
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I think he is saying Gold is dipping with the look of the chart pattern. + more. Just Guessing?
New Jazenevd
New Jazenevd Oct 10, 2021 6:58AM ET
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Gold price is not indicative of broad market conditions. Gold market is just too small, a speckle on broad market body; the latter can move gold price easily to any number for any reason.
hd tv
hd tv Oct 10, 2021 6:55AM ET
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why do all the articles on here seem to have a negative bias on all countries but the u.s? even they all are facing the same issue seem like its just a wall street propaganda machine
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Horyu Ken
Horyu Ken Oct 10, 2021 6:55AM ET
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more of an agenda motif....
Shawn Pewitt
Shawn Pewitt Oct 10, 2021 6:55AM ET
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Hey does this app have an investing service , also?
Waqar Aslam
Waqar Aslam Oct 10, 2021 6:55AM ET
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Only select the events and trade according to their out come!
Derrick Brubaker
Derrick Brubaker Oct 10, 2021 6:55AM ET
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Since psychology moves money, we found their intent. Always do the opposite! loll
AYYAN RAHAM
AYYAN RAHAM Oct 10, 2021 6:55AM ET
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how they effect on gbpjpy sell or buy please help me
New Jazenevd
New Jazenevd Oct 10, 2021 6:45AM ET
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Stock market performance is less dependent now on economic situation and more dependent on money printing. US economy is getting weaker, burdened by higher taxes and bureaucratic controls. US stock market is getting higher, fueled by asset inflation; the latter caused by excessive money creation.
 
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