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Top 5 Things to Watch in Markets in the Week Ahead

Economy Oct 23, 2022 06:46AM ET
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By Noreen Burke

Investing.com -- Earnings season is ramping up with the four biggest U.S. companies by market value among those set to report results in the coming week. The U.S. is to release third quarter GDP figures which are expected to show a return to growth after the technical recession in the first half of the year. The European Central Bank is widely expected to deliver another jumbo rate hike of 75 basis points on Thursday as inflation in the Eurozone approaches 10%. Political events in the U.K. will remain in the spotlight as the Conservative Party selects a new prime minister. Meanwhile, investors will be watching out for delayed economic data from China after President Xi Jinping consolidated power for a historic third term on Sunday. Here’s what you need to know to start your week.

  1. Megacap earnings

The four largest U.S. companies by market capitalization are due to report in the coming week with investors keen to see how the corporate bellwethers are performing against a backdrop of soaring inflation and and the Federal Reserve’s aggressive rate hike path which have raised fears over the prospect of a recession.

Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) are due to report on Tuesday, followed by Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) on Thursday.

Because of their heavy weightings, "if those stocks don’t get it done, that puts pressure on the indices to continue to go down," Chuck Carlson, chief executive officer at Horizon Investment Services told Reuters.

Third-quarter earnings season has so far has been better-than-feared after results from companies including Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), Netflix (NASDAQ:NFLX) and Johnson & Johnson (NYSE:JNJ) boosted sentiment.

  1. U.S. GDP

The U.S. is to release a first look at third quarter GDP on Thursday, with the economy expected to have expanded at an annualized rate of 2.1% after two consecutive quarters of contraction in the first half of the year.

The economic calendar also includes data on the Fed’s favored measure of inflation, the core personal consumer expenditure index, along with data on personal income and spending. Investors will also get data on durable goods orders, initial jobless claims, consumer confidence and reports on the housing market in the form of figures on both new and pending home sales.

Fed policymakers will enter their traditional blackout period ahead of their upcoming meeting on Nov 1-2 when they are all but certain to hike interest rates by 75 basis points for a fourth-straight time.

  1. ECB rate hike

A second 75 basis point rate hike by the ECB on Thursday looks like a done deal despite the looming prospect of recession in the euro area as Russia’s war in Ukraine stokes an energy crisis that is driving up inflation and hitting growth.

With euro area inflation at almost 10%, well above the ECB’s 2% target there's little appetite to slow down now, even if recession risks are rising.

Ahead of Thursday’s policy meeting October PMI data on Monday will show whether the euro area slid further into contraction territory at the end of the third quarter.

Meanwhile, revised third quarter GDP figures on Friday are expected to show evidence of slowing growth in France and a contraction in Germany.

  1. U.K. political turmoil

This week, Britain’s Conservative Party, which holds a big majority in parliament and is not obliged to call an election for another two years, is set to select a new leader who will become prime minister - Britain's fifth in six years.

Former chancellor Rishi Sunak, Penny Mordaunt and previous prime minister Boris Johnson are all potential successors to take over from Liz Truss, who quit on Thursday after just six weeks.

Truss was brought down by economic plans that included billions of pounds of unfunded tax cuts which sent sterling and bond markets into a tailspin, forcing the Bank of England to intervene.

The next prime minister will inherit an economy on course for recession, with rising interest rates and inflation over 10% leaving millions facing a cost-of-living crisis.

Chancellor Jeremy Hunt, who is expected to remain in office under the new prime minister said on Friday he would do “whatever is necessary” to drive down government debt ahead of his new budget set to be announced on Oct 31.

  1. China

Investors will be awaiting the release of delayed Chinese economic data, including third quarter GDP figures along with reports on trade, retail sales, industrial production, and the housing market for September.

Stringent COVID-19 curbs along with supply chain disruptions caused by the war in Ukraine plus slowing global growth due to sharp increases in borrowing costs to curb inflation have weighed on the world's second-largest economy.

Chinese President Xi Jinping secured a precedent-breaking third leadership term on Sunday and introduced a top governing body stacked with loyalists, with analysts watching closely to see what the implications for economic policy might be.

--Reuters contributed to this report

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (14)
stikstockitlive
stikstockitlive Oct 24, 2022 1:17AM ET
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go see stikstockitlive youtube make the most accurate predictions on friday .. literally have to see this live to know the value .. gs raised me .. bullish this week for certain
stikstockitlive
stikstockitlive Oct 24, 2022 1:17AM ET
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a desk traders dream life
Phil Ht
Phil Ht Oct 23, 2022 11:29PM ET
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Rishi Sunakfor PM. UK is lost
Igwo Jack
Igwo Jack Oct 23, 2022 6:49PM ET
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good job
True Stamp
True Stamp Oct 23, 2022 5:57PM ET
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Well done
Ahmad Shohaib
Ahmad Shohaib Oct 23, 2022 4:26PM ET
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Okoh Samuel
Okoh Samuel Oct 23, 2022 4:09PM ET
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Insightful article, thanks for the update
jason xx
jason xx Oct 23, 2022 11:44AM ET
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Watch all the but hurt trumper cucks that down vota a rise in gdp lmaoooo
jason xx
jason xx Oct 23, 2022 11:43AM ET
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Return to GDP growth will be good for at least a 200 point SPX rally
hd tv
hd tv Oct 23, 2022 11:43AM ET
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how have you come to that conclusion?
Steve McKinley
Steve McKinley Oct 23, 2022 11:43AM ET
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Let us know how living in fantasy land works out for you over the next couple of weeks
BUH lucky
BUH lucky Oct 23, 2022 10:48AM ET
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The author of this article needs to better proof read his work.
Brad Albright
Brad Albright Oct 23, 2022 10:48AM ET
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Her. And how so?
James Johannsen
James Johannsen Oct 23, 2022 10:15AM ET
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1 thing to watch 10 year yield
 
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