Weekly Outlook, 11-15 October

Significant economic data and beginning of Earnings reports! 

Market analyst – IFC Markets

Last week’s employment data was not as good as expected, however with the unemployment rate drops to 4.8% and 0.6% average earning raising, still pressure on the Federal Reserve to reduce support will continue. Next week, economic data from all developed economies with the beginning of earnings reports, creating a busy and great week. Let’s take a quick look at the week ahead and its most important events! 

UK employment numbers – Tuesday

UK Employment data and Average Earnings Index will publish on Tuesday. The economy has continued to improve in the past months that ended with the sharp decline in unemployment numbers all way down to 4.6% in July. The labor market in the UK and the US almost had the same fate. For this week we are expecting to see not much changes in recruitment rate. While reopenings are increasing the employment chances, at the same time, skills mismatches and some other concerns stop the growth of employment. Also in the Average Earnings, we can see an increase, the same thing that happened in the US as well. These data are expected to put the Footsie and other UK indices under pressure. 

Chinese Trade Data – Wednesday

We cannot ignore the Chinese role in the global economy. We saw what happened with global stock markets just because of growing concerns about China Evergrande. As the biggest factory in the world, Chinese September trade data on Wednesday will be watching closely by market participants. Getting closer to Christmas, usually increasing the Chinese export numbers, however, in September we had a power shortage in China also that caused production shutdowns of some heavy industries during the month. This expected weakness in the export numbers can be accompanied by the ease in the domestic market as well which can reduce the import numbers too. 

US inflation – Wednesday

Wednesday is the busiest day of the week. In the United States, while used vehicles prices that were the main concerns in the past months declined in September, other items like Food and Energy increased and again boosted the overall inflation numbers to grow higher. Recent increases in Home prices with weakness and disruption of the supply chain also are other reasons that can boost the US inflation numbers. Higher inflation is expected to put the US stock markets a bit more under pressure again, as it will increase the chance of Hawkish policies. 

 FOMC meeting minutes – Wednesday

What the latest FED speakers telling us is that Federal Reserve officials now are more worried about higher inflation levels than a few months ago. Now it seems that FOMC members that believe in a rate hike for 2022 are equal to the number of opponents. Bonds market and increasing the yields also are another factor to expect the more hawkish tone from this meeting minutes. Expected hawkish tone, supposed to help the US dollar index to hold its gains above 94 mark, with an eye to higher levels.

Earning reports kick-off – All week 

Again we are at the beginning of another earnings reporting cycle. Q3 earnings will kick off this week with the Financial sector mostly and Delta airline in the US. JPMorgan, Bank of America, Wells Fargo, Morgan Stanley, and Delta Airlines will be the first companies that are publishing their reports. Financial sectors were one of the good performance sectors in past months, and with higher inflation, we can expect their income to increase a bit. 

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