Week ahead: Markets look beyond US midterm elections

Monday 

The European session kicks off with German industrial production, UK house price data from Halifax, and the Eurozone Sentix investor confidence reports. 

Earnings: Palantir Technologies (PTLR), Viatris (VTRS) and Activision Blizzard (ATVI). 

Tuesday 

Congressional midterm elections take place in the US. Control of Congress as well as key state and local offices are up for grabs. Current polling indicates the Republicans will retake control of the House of Representatives but that the Democrats will retain the Senate. A divided government can be good for the market. A Republican clean sweep would likely take key Democrat legislation off the table (mainly positive for markets), whilst in the unlikely event that the Democrats retain both houses it could see them push on with fiscal stimulus (mainly negative). 

Whoever wins, markets tend to rally after these elections, going by historical analysis. In 17 of the 19 midterms since the war, stocks did better in the half-year after than the six months prior.  

Earnings: AMC Entertainment Holdings (AMC), Lemonade (LMND), Lucid Group (LCID), Occidental Petroleum (OXY), Plug Power (PLUG), Upstart Holdings (UPST), The Walt Disney Co (DIS). 

Wednesday 

 Reaction to the midterms will be the focus and bulls will be hopeful that stocks can bounce on the removal of the uncertainty that naturally leads into elections. Markets in Europe will also wake up to the latest consumer and producer inflation data out of China.  

 Earnings: Fiverr International (FVRR), Roblox (RBLX), The Trade Desk (TTD), Beyond Meat (BYND), Jackson Financial (JXN), Rivian Automotive (RIVN), Unity Software (U) 

 Thursday 

The latest US inflation report is the most important economic data set of the week. Last week the Fed made it clear it is not about to pause rate hikes due to stubbornly high price pressures. September CPI inflation rose 0.4% on a monthly basis, bringing the annual rate to 8.2%, which exceeded expectations Core CPI was the worry with +0.6% month-over-month and +6.6% compared to one year ago, the fastest pace in four decades.  

 Earnings: Nio (NIO) 

 Friday 

Veterans’ Day holiday in the US might mean there is a bit less liquidity, though the stock market remains open. But the focus for the first part of the European session is squarely on the UK GDP print and the final German inflation reading. Later on, attention turns to the preliminary University of Michigan consumer sentiment and inflation expectations surveys.