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Wall Street earnings

 

Here are the week’s key events:

Saddle up for a huge week for earnings on Wall Street with around a third of the Dow Jones industrial average reporting Q3 numbers, whilst Big Tech gets an outing with Microsoft, Meta, Alphabet and Amazon due to report. The European Central Bank is expected to pause and await new information on inflation and growth risks, whilst US and Japanese inflation data will be the focus for traders at the end of week looking to see what the Federal Reserve may do next.

 

Monday

Market attention early in the week will be squarely on events in the Middle East. Oil and gold both jumped in the wake of the terrorist atrocities in Israel and have not shown signs of recalibrating as fears of escalation in the conflict remain elevated. On the data front, the German Buba monthly report, EU consumer confidence and the Australian flash manufacturing and services PMIs are due on the tape.

 

Tuesday

Bank of Japan’s core inflation reading sets the tone for the day – how close to sustainably above 2% is the country? UK employment data will be closely watched by the Bank of England. Flash PMIs from Europe, the UK and US are due out as well to provide some colour on the pace of growth in developed markets. On the earnings front we get first of several Dow Jones components reporting alongside the tech giants Alphabet and Microsoft. As ever watch the Google owner and Snap for read across to digital advertising spending for the likes of Meta and Amazon, as well as Pinterest. And watch MSFT for cloud spending growth for Amazon. 

Earnings: 3M (MMM), Coca-Cola (KO), General Electric (GE), General Motors (GM), Spotify (SPOT), Verizon (VZ), Alphabet (GOOG), Microsoft (MSFT), Snap (SNAP), Visa (V)

 

Wednesday

Australian CPI data will be closely watched to see if it makes the RBA move. Minutes from the last meeting were hawkish, noting that interest rates could rise again “should inflation prove more persistent than expected”. The board looked at lifting rates earlier this month but determined “there had not been sufficient new information”. Then the Bank of Canada is expected to refrain from raising rates after inflation unexpectedly cooled to 3.8% in September. Markets moved swiftly to discount a pause – down to 16% chance for a rate increase from 43% before the figures.

Earnings:  Boeing (BA), Meta Platforms (META)

 

Thursday

ECB day: The European Central Bank is expected to pause its hiking cycle and await more information on inflation and the economy. At the last meeting in September the ECB hiked rates by 25bps, taking the cumulative total tightening to 450bps and the deposit rate to a record high.

But the message from the ECB was clear – it believes it has done enough and the hiking cycle is over. Given the rhetoric and the staff projections, inflation would now to have to be significantly higher and/or stickier for the ECB to hike again – today's meeting will provide more detail around this assessment. The problem is oil prices are rising and the ECB’s inflation projections are based on $82 crude in 2024.

Earnings: Bristol-Myers Squib (BMY), Mastercard (MA), Merck & Co (MRK), Amazon (AMZN), Ford (F), Intel (INTC)

 

Friday

The Tokyo core CPI inflation reading is going to be closely watched by the BoJ and JPY traders. The reading rose 2.5% in September, down from 2.8% in August. The “core core” rate dropped from 2.6% to 2.4% y/y. It’s probably less about how high these readings go now than how long they persist above 2% before the Bank of Japan bites the bullet and starts to normalise policy by ending yield curve control and ending negative rates. Meanwhile the core PCE inflation in the US will provide analogous assumptions for the Federal Reserve, Treasuries and USD crosses.

Earnings: AbbVie (ABBV), Chevron (CVX), Exxon Mobil (XOM)

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