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Top 5 Things to Watch in Markets in the Week Ahead

EconomyOct 24, 2021 07:51AM ET
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© Reuters

By Noreen Burke

Investing.com -- The week ahead brings earnings reports from several tech giants including Amazon and Apple. There are also some key economic reports in the coming week, including a first look at U.S. third quarter GDP on Thursday. The European Central Bank holds its latest meeting against a background of persistent inflation pressures. Evergrande has bought another week to deal with the looming debt crisis casting a shadow over the world’s second largest economy and the Bitcoin rollercoaster rolls on. Here’s what you need to know to start your week.

  1. Big tech earnings

Four out of the five FAANG stocks are set to report earnings during the week - Facebook (NASDAQ:FB) is set to report on Monday, followed by Google parent Alphabet (NASDAQ:GOOGL) on Tuesday, while Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) are reporting on Thursday.

FAANG's stellar growth and heavy weighting in the S&P 500 has given them an outsized impact on the broader equities market, propelling markets higher for over than a decade.

Strong earnings results could help tech stocks broaden the lead they have established over value stocks in a market tug of war, with stock investors caught between a strong economic recovery and surging commodity prices on one side, and rising Treasury yields and inflation on the other.

  1. U.S. GDP

Data on Thursday is expected to show the extent of the headwinds that hit the U.S. economy in the third quarter. Economists are forecasting that GDP growth slowed to 2.8% from 6.7% in the previous three months.

The impact of the delta variant, along with rising prices, supply chain strains and labor shortages contributed to the soft patch in growth, but those effects should dissipate in the fourth quarter.

Other economic data to watch during the week includes reports on durable goods orders on Wednesday, initial jobless claims on Thursday and personal income and expenditures on Friday. Friday’s data includes the core PCE price index, rumored to be the Federal Reserve's favorite inflation measure.

Economic data will be closely watched as it is coming just before the Federal Reserve’s November meeting the following week, where the central bank is expected to announce plans to begin cutting back on asset purchases, an important first step towards eventual rate hikes.

  1. ECB meeting

The ECB is to hold its next policy meeting on Thursday amid tensions between officials over how long an inflation surge in the euro area is likely to last and whether the bank should tweak monetary policy as a result.

At its last meeting in September policymakers deferred a decision on bond purchases to December, but since then euro area inflation has surged to a 13-year high amid supply bottlenecks and soaring energy prices.

The Fed is likely to start tapering in November and the Bank of England has indicated that interest rate hikes are coming soon so the question is, will the ECB follow?

Thursday’s post policy meeting press conference with ECB head Christine Legarde will likely give investors a clue into December’s decision.

  1. Evergrande buys time

Reuters reported Sunday that China’s Evergrande had resumed work on more than 10 projects in six cities, including Shenzhen.

The report came after the company appeared to avert a default last week, when it made a last-minute bond coupon payment, but there have still been no reports on progress about a comprehensive restructuring of the company’s massive debt pile.

China's second-largest property developer is mired in a debt crisis, with more than $300 billion in liabilities.

The crisis at Evergrande has spread across the broader Chinese property sector, which economists say makes up around 30% of the economy, leading to a string of default announcements, rating downgrades, and slumping corporate bonds.

  1. Bitcoin volatility

Bitcoin hit an all-time high of $67,016 on Wednesday, rising above April’s record propelled by bets the first U.S. bitcoin futures exchange traded funds would pave the way for more money to pour into digital assets.

The new ETFs track bitcoin futures rather than the cash price.

The new peak came after the world’s largest digital currency had struggled in recent months, briefly dipping below $30,000 as China cracked down on digital currencies.

Bitcoin advocates believe the onset of ETFs will support prices. Others tout the digital currency as a hedge against inflation and say that is a bigger factor in its rally, but sceptics say it is more of a symptom.

Either way, bitcoin volatility looks set to continue.

--Reuters contributed to this report

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (5)
Seif Jdid
Seif Jdid Oct 24, 2021 1:49PM ET
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oui
Kaveh Sun
Kaveh Sun Oct 24, 2021 12:07PM ET
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Excuses, excuses so Biden can pump out more free monies. Over 6T (over 25% gdp) in stimuluses result in a pathetic 3% growth. Where did the monies go? Companies, the rich, corrupted politicians, take the free money and keep them. The working class gets the stick.
New Jazenevd
New Jazenevd Oct 24, 2021 12:07PM ET
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Certainly, politically connected super-rich are the main beneficiaries of Biden’s money printing. Money begets money and this goes the best by politically lubricated channels. Burisma Joe came to WH with vast experience in the field.
Carson Chapin
Carson Chapin Oct 24, 2021 10:53AM ET
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Oil & inflation are the play right. I have 30% return in 5 weeks on this play, which let up in sight. Futures on oil are 1 direction; UP.
Ronald Warren
Ronald Warren Oct 24, 2021 10:53AM ET
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There will be a correction on oil later this week when GDP is released. Take profits Wed. buy in Fri.
New Jazenevd
New Jazenevd Oct 24, 2021 10:53AM ET
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Yep, oil price goes to triple digits.
Remind Mokoena
Remind Mokoena Oct 24, 2021 10:08AM ET
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Do you think Nas100 will rise because of FAANG's earnings announcements ?
Josh Benjamin
Josh Benjamin Oct 24, 2021 10:08AM ET
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hello
Remind Mokoena
Remind Mokoena Oct 24, 2021 10:08AM ET
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hello
New Jazenevd
New Jazenevd Oct 24, 2021 8:52AM ET
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FAANG outsized impact on stock market will not disappear unless US government takes real step in applying anti-monopoly laws. These laws are already available; however, politicians, esp. hypocritical Dem politicians, will not go against super-monopolies, making timely donations to the Party coffers. This is already quite similar and getting even more similar as time goes, to Chinese state-controlled system, still allowing “private enterprises”, as long as they follow party line.
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New Jazenevd
New Jazenevd Oct 24, 2021 8:52AM ET
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Antonio Velardo  Actually, I am registered as an independent voter. In any case, a mature person could rather try replying to the message contents instead of trying to find/create a fault regarding messenger.
Antonio Velardo
Antonio Velardo Oct 24, 2021 8:52AM ET
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frank zapper well i do not understand the connection between FAANG monopoly and China. Like starting talking of football and ending up with cheeseburger.
New Jazenevd
New Jazenevd Oct 24, 2021 8:52AM ET
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Antonio Velardo  Chinese economy has many monopolies, directly or indirectly controlled/supported by state. In exchange these monopolies are 100% politically correct in terms of Chinese politics. Understood now?
Antonio Velardo
Antonio Velardo Oct 24, 2021 8:52AM ET
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New Jazenevd I still believe that it is not necessary to always put China in the middle as a justification for any reasoning. Before it was communist Russia, but now it is no longer fashion. This is qualunquism.
New Jazenevd
New Jazenevd Oct 24, 2021 8:52AM ET
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Antonio Velardo  Always? Do you use the word based on one message? Kind of illogical, to say the least.
 
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