Global markets face a busy week as US and eurozone inflation figures, major bank earnings and political developments in the United States shape expectations for interest rates and corporate performance.
Investors will be watching US consumer price index (CPI) data for September, due on Wednesday 14 October, for signs of whether inflationary pressures are strengthening. The figures will be particularly relevant ahead of the Federal Reserve’s next policy meeting later this month.
US headline inflation is forecast to rise to 3.6% year on year, up from 3.4% in August, according to CMC Markets. Core inflation, which excludes food and energy, is expected to reach 2.5%, compared with 2.4% previously. A higher-than-expected reading could reinforce concerns that interest rates will remain elevated, while a softer result could support expectations of a pause in further tightening.
Bank earnings put corporate performance in focus
The start of the US third-quarter reporting season will provide another important test for equity markets. JPMorgan Chase, Goldman Sachs and Wells Fargo are among the major banks scheduled to report on Tuesday 13 October.
JPMorgan is expected to report earnings per share of $5.90, an increase of 16.4% year on year, while revenue is forecast to rise by 8.8% to $51.3 billion, according to analyst estimates cited by CMC Markets.
Investors will also assess trading income, net interest income and management commentary for indications of consumer demand, lending conditions and activity across financial markets.
Bank results could help determine whether earnings growth can support equity valuations as borrowing costs remain high. Further reports from Bank of America, Morgan Stanley and other financial institutions are due later in the week.
Eurozone inflation and UK economic data
European markets will also be assessing inflation figures, with Germany’s September CPI data due on Tuesday, France’s figures on Thursday and the eurozone’s final inflation reading scheduled for Friday.
The data will help investors evaluate the outlook for European Central Bank policy as inflation, currency movements and borrowing costs continue to influence expectations for interest rates.
In the UK, August GDP, industrial production, manufacturing output and trade figures are scheduled for Thursday 15 October. The releases will provide further information on the performance of the British economy and could affect expectations for the Bank of England’s next policy decisions.
US midterm elections add to uncertainty
The approaching US midterm elections are another consideration for investors as markets assess the potential implications of changes in congressional control for fiscal policy, regulation and government spending.
Election-related uncertainty may influence sentiment towards sectors sensitive to government policy, although the implications will depend on the outcome and the proposals advanced by policymakers.
CMC Markets plc (LON:CMCX) is a UK-based financial services company that offers online trading in shares, spread betting, contracts for difference and foreign exchange across world markets.
