The Market This Week: 10 October

By Stephan Maier
Editor, Economics Student

Back after a week-long break, here is what’s happening in the coming days starting on Monday, 10 October:

Looking at Europe, we are expecting good economic sentiment numbers from Germany on Monday – that is because latest Brexit fears are not yet taken into account. Of course all readers will have followed last week’s rising fears of what some call a hard Brexit -that should be expected to affect next month’s economic sentiment. What we saw happening, many believe to be a sign of the markets’ fears that London’s role as a financial centre might not be a central priority of this government during Brexit negotiations. Looking ahead, analysts believe the falling pound to have some positive impact on the FTSE100, as many companies report in US Dollars not pounds, and hence these developments are boosting their earnings.

Also expected for Monday are US labour market figures are expected for Monday.

On Tuesday, US Q3 earnings season is kicked off by Alcoa (the first S&P500 company to report), and more interestingly, figures from Citigroup, JP Morgan Chase and Wells Fargo are coming in on Friday. Analysts are expecting a decline of 0.7 percent compared to Q3 2015, however revenue of S&P 500 companies is expected to be up by 2.5 percent. It will be interesting to see whether companies are beating expectations this quarter, as stocks might get ready for and end-of- year rally.

On Wednesday we are getting the latest US crude oil inventory figures. Stockpiles have recently been decreasing, indicating some improvements in the oil markets. These might be signs that demand is picking up, and of course combined with the prospect of OPEC limiting output in the near future watch out for the informal talks that have started today on Sunday in Turkey), this is bullish news for the market. The ceiling of WTI futures at $52 might be broken in the coming days. Despite falling prices on Friday we have seen a weekly increase in the price for the past three weeks, so this is definitely something to look out for.

Also on Wednesday, the FED’s FOMC meeting minutes will be released. Look out for more hints pointing at a rate hike in the US in December.

On Thursday and Friday our interest shifts to China, which is releasing trade as well as inflation data over these two days. We expect a widening trade surplus and consumer inflation of a 1.6 percent. Also look out for us retail sales data on Friday.