In-depth Analysis

Focus on CPI data, and BoC, ECB, and BoJ monetary meeting | Weekly Outlook October 24-28

 

On Monday 24th: Manufacturing and Services PMI reports for Japan, France, Germany, the EU and the US are due.

On Tuesday 25th: The German Ifo Business Climate Index is due, and a US Consumer Confidence report published.

On Wednesday 26th: Australian CPI data due, US New Home Sales, and the BoC gathers for its Monetary Policy Meeting. US crude oil inventories are also due.

On Thursday 27th: ECB Monetary Policy meeting will be held, plus US GDP and Core Durable Goods Orders are released.

On Friday 28th: Japanese CPI and Monetary Policy meeting due today, German GDP and CPI released, French and Spanish GDP due, and US PCE and Pending Home sales published. 

Weekly outlook

Another huge week for Q3 earnings reports this week, as investors brace themselves for some potentially brutal figures from some of the big tech companies such as Alphabet, Microsoft, Amazon, Facebook, and Twitter, among others. After months of cost-cutting measures and layoffs, the highly anticipated Q3 numbers will give an interesting insight into where these businesses may end up as the US economy continues towards recession.

Monetary Policy meetings for the Bank of Canada, the European Central Bank, and Japan are also happening this week. While it is expected that Canada and Europe will be working to flatten growing inflation by aggressively continuing to raise interest rates, Japan bubbles along with its rates set to continue below 0 and inflation figures that would make the rest of the world green with envy.

Monday 24th of October

China was due to publish its GDP and Industrial Production data today, and many investors would have been interested to see how the economic giant is fairing this month after the economy grew only 0.4% during Q2 from the previous year. According to the country’s National Bureau of Statistics though, the data release will be delayed to an undisclosed later date as the Communist Party meets for its congress.

Manufacturing and Services PMI reports are also due for a number of major economies including Japan, France, Germany, the EU, and the US. Readings above 50 in the index indicate growth in the sector, while a reading below can indicate a contraction. Forecasts are mixed, but generally heading in a more negative direction. 

All countries mentioned are looking at declines in their Services PMIs. Japan’s index may drop from 52.2 to 49.8, France 52.9 to 50.5, Germany 45 to 44.8, the EU 48.8 to 48.2, and the US from 49.3 to 45.

French Manufacturing is forecast to increase from 47.7 to 49.8, while all others are expected to decline, with the German index to fall to 47.2 from 47.8, the EU 48.4 to 48, and the US 52 to 51.1.

Major Earnings Reports Due:

  • Philips
  • Groupe SEB

Tuesday 25th of October

The monthly German Ifo Business Climate Index is released today and is expected to show further declines as sentiment for the German economy worsens. At its lowest level since May 2020, last month was at 84.3, the forecast is for around 83.2 this month.

US Consumer Confidence as measured by the Conference Board is set to drop after two consecutive months of positive numbers. This index measures business sentiment and future trends based on how consumers feel about the economy. A slight decline from 108 to 106 is expected.

Major Earnings Reports due:

  • Google
  • Alphabet Inc
  • Visa
  • Coca-Cola
  • Novartis 
  • UPS
  • Texas Instruments
  • HSBC
  • General Motors
  • Twitter
  • General Electric
  • SAP
  • Air Liquide
  • Vinci
  • Halliburton
  • Logitech
  • Mattel

Wednesday 26th of October

Australia reports on its CPI data today for a look at the impact of tightening monetary policy on price stability. The third quarter numbers are expected to have improved compared to the previous quarter, from 1.8% to 1.5%. However, compared to last year the forecast is for an increase from 6.1% to 6.9%. It’s widely expected that inflation in the country will hit around 7.75% by the end of the year.

New Home Sales in the US are expected to have dropped from 685K to 630K for the month of September, as prices continue to remain resilient, despite pressure from rate increases and an increase in the supply of homes.

The Bank of Canada is due to meet for its monetary policy meeting today. The board is expected to deliver a headline rate increase of 50 basis points from 3.25% to 3.75%, after last month’s 75 basis points hike. Inflation in the country is predicted to slow, but is still currently sitting at 7%, far above the bank’s target rate of 2%. Some economists are expecting rates to continue climbing towards the end of the year, but at a slower pace, as recession fears grow.

Crude Oil inventories in the US, which measures the weekly change in supply held in the country, is set to have increased from -1.725M to 1.380M.

Major Earnings Reports due:

  • Microsoft
  • Thermo Fisher Scientific Inc
  • Bristol-Myers Squibb Co
  • Boeing
  • Waste Management Inc
  • Meta
  • Daimler
  • Heineken
  • Kraft Heinz
  • Dassault Systemes
  • Santander
  • Thales
  • Unicredit
  • Barclays
  • eBay
  • Standard Chartered
  • Symrise
  • Sodexo
  • Biomerieux
  • TechnipFMC

Thursday 27th of October

The ECB meets for their monetary policy meeting on Thursday, and it is expected that the board will hand down another sizable increase of 75 basis points to the deposit and refinancing rates, up to 1.50% and 2.00% respectively. Inflation is still sitting at five times the targeted rate of the ECB at 10%, and is remaining persistent while the energy crisis and Ukrainian conflict continue to loom.

The US is due to publish its GDP data for the month and Core Durable Goods Orders for September. An increase from -0.6% to 2.0% is expected for Q3 GDP compared to Q2. While the change in new orders for durable manufactured items is expected to have dropped slightly from 0.3% to 0.2%. A lower reading is suggestive of less manufacturing activity in the economy.

Major Earnings Reports due:

  • Apple
  • Amazon
  • Mastercard
  • Merck & Co
  • McDonald’s
  • T-Mobile US Inc
  • Linde
  • Comcast
  • Intel
  • Caterpillar
  • Unilever
  • TotalEnergies
  • Shopify
  • Baidu
  • Capgemini
  • Saint Gobain
  • Credit Suisse
  • Valeo
  • Ubisoft
  • Schneider Electric

Friday 28th of October

Japan releases its October CPI data, which is expected to remain unchanged at 2.8% year-on-year. The Bank of Japan is also due to meet for its monetary policy meeting, where it is expected to keep rates the same at -0.1%. Economists predict this rate will endure through 2022 and may increase slightly next year to 0.10%, as the country works to gently bring inflation back to the target of 2%.

Germany releases both its GDP and CPI numbers today. GDP is expected to remain unchanged on the previous year at 1%, but compared to last quarter it is forecast for a drop from 0.1% to -0.2% as the economy slows down in the midst of the energy crisis. CPI is still on the rise, widely expected to increase to 10.1% from 10% today.

French and Spanish third quarter GDP are both expected to show drops from 0.5% to 0.2% and 1.5% to 0.4% respectively, while it is hoped that Canadian GDP will remain steady at 0.1%.

The US is due to publish a number of releases today, most notably the Core Personal Consumption Expenditure (PCE) Price Index, and the Pending Home Sales reports. 

PCE measures the difference in the price of goods and services for consumption minus food and energy, and is expected to have decreased from 0.6% to 0.5% for the month of September compared to August. Pending home sales for September are expected to have increased from -2.0% to -1.4%, indicating there are more homes sold but waiting for contracts to be closed than the previous month.

Major Earnings Reports due:

  • Exxon-Mobil
  • Chevron
  • Sanofi
  • Airbus Group
  • Sony
  • Glencore
  • Colgate-Palmolive
  • Safran
  • Air France

 

 

 

 

 

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