By Noreen Burke
Investing.com — Earnings season has picked up with the top four U.S. companies ranked by market value. These four companies will report their results in the next week. The U.S. will release third quarter GDP figures, which are expected show growth after the technical recession that occurred in the first half. As inflation in Europe approaches 10%, the European Central Bank will likely announce another 75 basis point jumbo rate rise on Thursday. The Conservative Party will elect a new prime minster and political events in the U.K. are likely to remain in the spotlight. Investors will be monitoring delayed economic data from China as President Xi Jinping consolidated his power for a historic third time on Sunday. Here’s what you need to know to start your week.
- Megacap earnings
The four largest U.S. companies by market capitalization are due to report in the coming week with investors keen to see how the corporate bellwethers are performing against a backdrop of soaring inflation and and the Federal Reserve’s aggressive rate hike path which have raised fears over the prospect of a recession.
Microsoft (NASDAQ 🙂 and Alphabet(NASDAQ 🙂 will report on Tuesday. Amazon (NASDAQ 🙂 and Apple are expected to report on Thursday.
Because of their heavy weightings, “if those stocks don’t get it done, that puts pressure on the indices to continue to go down,” Chuck Carlson, chief executive officer at Horizon Investment Services told Stocksak.
Third-quarter earnings season has so far has been better-than-feared after results from companies including Goldman Sachs (NYSE:), Bank of America (NYSE:), Netflix (NASDAQ:) and Johnson & Johnson (NYSE:) boosted sentiment.
- U.S. GDP
The U.S. will release the first look at its third quarter GDP Thursday. The economy is expected to have grown at an annualized rate after two quarters of contraction in half of the year.
The economic calendar also includes data on the Fed’s favored measure of inflation, the , along with data on and . Investors will also receive data on, as well as reports on the housing market, including figures on both and.
The Fed policymakers will enter a traditional blackout period before their Nov 1-2 meeting, when they are almost certain to raise interest rates by 75 basis point for the fourth time in a row.
- ECB rate increase
A second 75 basis point rate hike by the on Thursday looks like a done deal despite the looming prospect of recession in the euro area as Russia’s war in Ukraine stokes an energy crisis that is driving up inflation and hitting growth.
With euro area inflation at almost 10%, well above the ECB’s 2% target there’s little appetite to slow down now, even if recession risks are rising.
Ahead of Thursday’s policy meeting October data on Monday will show whether the euro area slid further into contraction territory at the end of the third quarter.
On Friday, revised third quarter GDP numbers will be released. They are expected to show evidence that there has been a slowing in and a contraction of.
- Political turmoil in the U.K.
This week, Britain’s Conservative Party, which holds a big majority in parliament and is not obliged to call an election for another two years, is set to select a new leader who will become prime minister – Britain’s fifth in six years.
Potential successors to Liz Truss’s post are Penny Mordaunt, Rishi Sunak, and Boris Johnson, former prime minister.
Truss was brought to the ground by economic plans that included billions of dollars in unfunded tax cuts, which sent sterling and bond markets into a tailspin. This forced the Bank of England intervene.
The economy will be in recession when the next prime minister inherits it. Inflation over 10% and rising interest rates will cause a crisis for millions of people.
Chancellor Jeremy Hunt, who is expected to remain in office under the new prime minister said on Friday he would do “whatever is necessary” to drive down government debt ahead of his new budget set to be announced on Oct 31.
Investors will be waiting for delayed Chinese economic data, including third quarter GDP figures, reports on trade and retail sales, and reports on the September housing market.
The world’s second largest economy has been hit hard by strict COVID-19 restrictions, supply chain disruptions due to the war in Ukraine, and slowing global growth as a result of sharp increases in borrowing costs to curb inflation.
Xi Jinping, Chinese President, won a record-breaking third term of leadership on Sunday. He also introduced a top governing board made up of loyalists. Analysts will be closely monitoring the implications for their economic policy.
–Stocksak contributed this report