Please try another search
Economy4 hours ago (Oct 31, 2021 07:45AM ET)
© Reuters.
by Daniel Shvartsman
Despite high-profile earnings report misses, a central bank surprise decision, and uninspiring economic data, markets pushed higher to close out October. The leading U.S. indices – , , and – each set all-time high closes. European indices moved higher as well, and cryptocurrency trading saw a bevy of spikes and all-time highs. That market optimism will be tested from all sides this week, as a slew of corporate earnings, non-farm payrolls, and a Fed meeting that is expected to signal the start of QE tapering.
Here’s what you need to know to start your week.
Earnings Season Rolls On
Earnings continue to be the main story in stock markets around the world. While many of the biggest names have already reported, with Microsoft (NASDAQ:) and Alphabet (NASDAQ:) being top performers last week and Apple (NASDAQ:), Amazon (NASDAQ:), and Facebook (NASDAQ:) – Meta – lagging, a much wider swath of companies will update on Q3 this quarter.
Those include:
Travel companies such as RyanAir (LON:) (Monday), Air Canada (TSX:) (Tuesday), Booking Holdings (NASDAQ:) (Wednesday), Expedia (NASDAQ:) (Thursday), and Amadeus IT (MC:) (Friday).
Commodity producers or related companies such as ConocoPhillips (NYSE:) (Tuesday), Diamondback Energy (NASDAQ:) (Monday), Williams Companies Inc (NYSE:) (Monday), Mosaic Co (NYSE:) (Monday), CF Industries (NYSE:) (Wednesday), EOG Resources (NYSE:) (Thursday), Dominion Energy Inc (NYSE:) (Friday), and Enbridge (NYSE:) (Friday)
Tech companies from e-commerce to semiconductors to software, such as NXP Semiconductor (NASDAQ:) (Monday), Arista Networks (NYSE:) (Monday), Activision Blizzard (NASDAQ:) (Tuesday), Electronic Arts (NASDAQ:) (Wednesday), Etsy (NASDAQ:) (Wednesday), Datadog Inc (NASDAQ:) (Thursday), Skyworks (NASDAQ:) (Thursday), Carvana Co (NYSE:) (Thursday),and Wayfair (NYSE:) (Thursday).
Industrials and Pharmas such as Pfizer (NYSE:) (Tuesday), T-Mobile US Inc (NASDAQ:) (Tuesday), Eaton (NYSE:) (Tuesday), Cummins (NYSE:) (Tuesday), Emerson (NYSE:) (Wednesday), Humana (NYSE:) (Wednesday), CVS Health (NYSE:) (Wednesday), Toyota Motor Corporation ADR (NYSE:) (Thursday), and Honda Motor Co Ltd ADR (NYSE:) (Friday).
Supply chain issues and inflation will of course be on investors’ minds as they watch these reports, as well as how much the Q3 U.S. growth slowdown hit these companies, and what that means for their respective outlooks. As companies lap pandemic affected quarters, figuring out what is the new normal for companies that are either recovering or were big 2020 winners will also be on the docket.
Non-farm payrolls
After October’s disappointing and the muted number, November’s will test the strength of the U.S. economic recovery. Expectations are for 385K new jobs, after the NFP missed expectations in each of the last two months.
Whether that lull was temporary and due to either the summer delta variant surge or supply chain issues remains to be seen. The report may weigh on the speed of Fed tapering, and might also give added impetus to Democrats in Congress on their budget package negotiations.
Fed Meeting
The (FOMC) report comes out at 2pm on Wednesday after a two-day meeting. Fed chair Jerome Powell has said in recent weeks that the plan to start tapering in November is still on, so the question is whether that will bear out.
The Bank of Canada’s last week that they would stop quantitative easing caught some by surprise, and it remains in question both how quickly central banks will move away from pandemic-era extraordinary measures and how the economy and the markets will react.
Also to watch in Powell’s comments and the that follows is what his current view on inflation is, after the debates over whether it is transitory or persistent, and what that means for the pace of interest rate hikes in the months (years?) to come. Of note, the popped on Friday after trading lower much of the month, and will be in focus if there are any surprises.
On Thursday, the releases its November monetary policy decision, with many in the markets expecting a 15 basis points hike. How markets handle the return of monetary tightening remains to be seen, no matter how much it is ‘priced in’ already via expectations.
Manufacturing PMI reports
As we enter the holiday season to finish the year, the supply chain snarls and various growth slowdowns will be in the spotlight. A number of PMI reports come out this week. China already with a disappointing 49.2, marking . The , ., and other Euro Zone countries will all report. Expectations are for expansion across the board – numbers above 50 on the index – and will give an additional indicator on how the global economy sets up to finish the year, and perhaps how long consumers will have to purchase their holiday presents in advance.
Crypto: Another Bitcoin ETF, And Monetary Tightening
Two weeks ago it was , and last week it was as a leading cryptocurrency to set a new all-time high. Meanwhile, smaller and less grounded coins such as continue to grab headlines.
There are two headline stories to watch for crypto impact this week. First, a third bitcoin ETF is expected to start trading, as the VanEck Bitcoin Strategy ETF (NYSE:) is expected to list by Wednesday. Excitement over the first ETF, ProShares Bitcoin Strategy ETF (NYSE:), may have propelled bitcoin to all-time highs, but the response to the second, Valkyrie Bitcoin Strategy ETF (NASDAQ:), was more muted.
It’s also worth watching how the crypto complex reacts to a tightening environment. Much of the investment thesis for crypto is tied to inflation and the value of money; an increase in the cost of capital via central bank tightening could make traditional currencies and assets relatively more attractive. While in large part a coincidence, the tightening cycle in 2018 and the simultaneous off year in crypto may be worth keeping in mind even as optimism in the sector remains high.
Related Articles
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.