This week in Market 24-28 October 2022

This week in Market 24-28 October 2022

The US will have a busy week with the release of earnings reports, an early estimate of GDP growth in the third quarter, orders for durable goods, and flash PMI data taking center stage. Investors will also pay particular attention to central bank meetings in the Euro Area, Japan, Canada, Brazil, and Russia as well as brand-new Q3 GDP growth estimates for China, Germany, France, Spain, and South Korea. Finally, recent PMI data for the Euro Area, the UK, Japan, and China could shed some light on the state of the economy in October.

As October draws to a close, the outlook for the global economy has drastically worsened as central banks stick to their intentions to tighten monetary policy in an effort to combat persistently rising inflation. Investors are now focusing on a busy week of earnings releases, which will include data from Alphabet, Microsoft, Twitter, Facebook, Amazon, and Apple, among other significant businesses. Regarding economic reports, the third-quarter GDP figures will stoke the discussion about whether the world’s largest economy is approaching a recession. For more hints on the Federal Reserve’s path toward rate increases, market players will also closely follow the preferred personal consumption expenditures inflation rate. Additionally, tracking October’s flash PMI figures will be interesting. New house sales, personal income and consumption, and orders for durable products are some other crucial economic indicators.

In other parts of America, the central banks of Canada and Brazil will make decisions regarding monetary policy, while Canada will also announce the preliminary September GDP figures.

After statistics last week showed inflation hit a new record of 9.9% in September, the European Central Bank is widely anticipated to deliver another 75 bps rate hike on Thursday, pushing borrowing costs to their highest level since early 2009. Investors will also be paying close attention to President Lagarde’s news conference for any remarks she makes regarding quantitative tightening, decreasing the ECB’s balance sheet, and modifications to TLTRO loans. On the macroeconomic front, preliminary estimates suggest that the German economy shrank in the third quarter as it struggled with rising energy prices. In the meantime, both France and Spain are anticipated to see a modest increase in GDP. Additionally, according to early CPI data, inflation is expected to continue to increase in Germany and Italy while remaining stable in France. While the Ifo business climate indicator most likely continued to decline, the German Gfk consumer confidence indicator is forecast recovering from a record low. The October flash PMIs, the Switzerland KOF leading indicators, the Turkey business survey, and other pertinent data should also be monitored. Additionally, the Russian central bank may decide to halt its rate-cutting cycle.

After Liz Truss’ resignation as prime minister of the UK on Thursday, the ruling Conservative Party in the UK is picking a new leader for the second time this year. The start of Q4 is projected to see the private sector slip into recession, according to the economic calendar, as the services sector is expected to contract for the first time in 20 months and manufacturing activity is predicted to worsen.

Investors anticipate China to release a slew of macroeconomic data after the 20th National Congress of the Chinese Communist Party, including Q3 GDP and industrial production, retail sales, trade balance, and fixed investment for September. These data were previously postponed indefinitely earlier in the month. Additionally, new PMI data will be made available, giving information on the performance of the Chinese economy in October.

In Japan, the BoJ is scheduled to announce its quarterly outlook report and maintain its key short-term interest rate at -0.1% as the yen trades at 32-year lows and JGBs exceed the central bank’s cap. Data on unemployment will also be made public in Japan. Investors everywhere are eagerly awaiting South Korean GDP figures as well as consumer and company confidence.

The third quarter CPI numbers in Australia, which are anticipated to reveal the greatest inflation in more than 30 years, will be the main topic of discussion. The October PMI figures are also anticipated. The ANZ will release consumer and business confidence data for October in New Zealand.