Earnings results and U.S. retail sales numbers will be closely watched in the week ahead for indications on the strength of the economy and what that could mean for Federal Reserve interest rates. The European Central Bank is expected to deliver another quarter point rate cut, while China will publish figures on third quarter growth. Meanwhile, oil prices look set to remain volatile and demand disruptions and elevated geopolitical tensions. Here's your look at what's happening in markets for the week ahead.
1. Q3 earnings
Earnings season got underway on Friday, with shares of JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) jumping after both banks surpassed estimates.
More big banks are due to report in the coming week, including Bank of America (NYSE:BAC) and Citigroup (NYSE:C) on Tuesday, while Netflix (NASDAQ:NFLX) is due to report after the close on Thursday.
Investors will be closely watching results from Netflix - specifically whether the streaming service is adding or losing customers and at what pace - for insights into the health of consumer spending.
Companies will need to top expectations for profit growth in their quarterly reports to support the stock market's valuation, which stands well above its historical average.
Third quarter earnings results should confirm that large-cap corporate profit growth remains solid, analysts at UBS said in a note on Friday. "Now that the Fed has started its rate-cutting cycle, the economy should get a further boost from lower interest rates on things like credit card debt and business loans."
2. U.S. data, Fedspeak
Markets will get another update on the health of the U.S. consumer on Thursday, with investors hoping retail sales data will offer further insight into an economy that is turning out to be far more resilient than many had expected.
Recent stronger-than-forecast labour market data prompted investors to reevaluate bets on how deeply the Fed will need to cut rates in coming months and a healthy retail sales print could further amplify that trend, offering evidence of strength in an important pocket of the world's largest economy.
Investors will also get a chance to hear from a handful of Fed officials in the coming days, including Governor Christopher Waller, Minneapolis Fed President Neel Kashkari and San Francisco Fed President Mary Daly.
3. ECB rate cut
The ECB is set to deliver another quarter-point rate cut on Thursday, a move policymakers and market watchers had all but ruled out after the bank’s last meeting in September.
Since then, indications that economic growth is slowing and price pressures are easing have increased the need for faster cuts to support the bloc’s economy.
Some analysts reckon Thursday's move could kick off back-to-back rate cuts.
Cutting again in October will be significant, analysts at Deutsche Bank said in a note on Friday. “As the first back-to-back cut of the cycle, it would signal a pivot into a faster easing cycle. Nevertheless, the high level of macro uncertainty means that despite the pivot, we are not expecting the ECB to move away from the 'data dependent, meeting by meeting' approach to policy.”
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. 4. China GDP
China's third-quarter GDP data, due out on Friday, will be the highlight of a busy week for economic data from the world's second-largest economy.
Policymakers have expressed confidence in reaching their annual growth target of around 5%, despite a weak second quarter and the expectation of little improvement in the third.
Investors may overlook the pessimism given Beijing's recent announcement of aggressive stimulus measures, which boosted mainland stocks to new highs. While some of the initial enthusiasm has waned, further details on fiscal support could fuel another market rally.
In addition to GDP, China will release data on trade, house prices, and retail sales, providing policymakers with insights into the challenges into the end of the year.
5. Oil prices
Oil prices settled lower on Friday but rose for the second straight week as investors weighed factors such as possible supply disruptions in the Middle East and Hurricane Milton's impact on fuel demand in Florida.
Both benchmarks ended the week more than 1% higher as markets awaited Israel's response to a massive missile attack from Iran.
Iran launched more than 180 missiles against Israel on Oct. 1, raising the prospect of retaliation against Iranian oil facilities.
Florida began what will be a long and difficult recovery on Friday after its second major hurricane in two weeks, with the widespread destruction expected to dampen fuel consumption.
Florida is the third-largest gasoline consumer in the U.S., but there are no refineries in the state, making it dependent on waterborne imports.
