After a volatile few days in global markets driven by a back-up in bond yields and concerns about global growth, there’s a lot on next week’s agenda that could make investors jittery.
Here’s what to watch in the coming days.
Monday marks the deadline for countries to submit draft 2019 budgets to the European Commission and the Italian submission is likely to garner the most attention.
“Plans for a 1.7% of GDP structural deficit for 2019/20/21 will not be greeted well by the European Commission and presumably will spark a war of words,” strategists at ING note. “We struggle to see the Italian government backing down anytime soon and could see the EUR under pressure again.”
Investors will keep an eye on the pound on Tuesday when EU’s chief Brexit negotiator Michel Barnier updates the region’s leaders in Luxembourg.
“This meeting of EU leaders was meant to sign off on the deal on the UK’s exit from the EU. However, that timetable has now slipped, with both sides talking about mid-November as a more likely point for sign-off on a deal,” said strategists at RBC Capital Markets.
“However, a proposed November meeting will take place only if EU leaders agree that sufficient progress on the question of the Irish border and future trading relationship has been made, so while this meeting is not quite the definitive one that it was initially meant to be, nonetheless it remains a key milestone in the Brexit process.”
On the data front, investors await updates on the UK labour market report due Tuesday, which is expected to show the unemployment rate unchanged at 4 per cent in August. They also look to inflation data, with consumer prices estimated to have climbed 0.2 per cent in September from the previous month and 2.6 per cent year-on-year.
Meanwhile, retail sales data due Wednesday are expected to have slid 0.4 per cent month-on-month in September but have climbed 3.7 per cent year-on-year, when excluding sales of auto fuel.
The minutes of the Federal Reserve’s September monetary policy meeting — when the central bank opted to lift rates for a third time this year — land on Wednesday.
“The September FOMC minutes will probably sound upbeat given the recent strong data. However, we expect the emphasis to be on the gradual nature of the hiking cycle, reinforcing the data dependence of the Fed,” note economists at Bank of America.
The minutes come on the heels of President Donald Trump’s criticism of the central bank’s recent rate rises.
Investors also await updates on the health of the US consumer, housing market and industrial production. Retail sales are expected to have climbed 0.6 per cent in September from the previous month, with auto purchases post Hurricane Florence bumping sales. Stripping out more volatile items, so-called control sales are expected to have climbed 0.4 per cent last month.
Amid concerns about global growth and the ongoing trade spat between Washington and Beijing, China is set to report its third-quarter growth figures. Data next week are expected to show growth cooled in the third quarter with estimates for a 1.6 per cent quarter-on-quarter and 6.6 per cent year-on-year rise in GDP. That compares with a 1.8 per cent and 6.7 per cent increase, respectively, the previous quarter.
US third-quarter earnings season has got off to a solid start with JPMorgan, Citigroup and Wells Fargo reporting big increases in quarterly profits. Next week, 54 companies listed on the S&P 500 are slated to report results. The roster includes UnitedHealth, Johnson & Johnson, Morgan Stanley, Goldman Sachs, American Express, Schlumberger and United Continental.
Get alerts on Global Economy when a new story is published