There will be a big decision facing Kevin Warsh and the Fed Open Market Committee. Will he and the rate-setting committee have enough courage to hike the Fed fund rate ahead of the mid-term elections? It will be a tough call to strike the right balance between delicate political pressures and pressing economic issues.
Whilst the Fed could chicken out on hiking rates, the Bank of Canada is expected to lift the overnight rate by 25 basis points to 2.5%. The Canadian central bank is concerned about the economy, but it could also be more worried about inflation. In September, the rate of inflation rose to 3.1%.
The European Central Bank and the Bank of Japan will also have interest-rate decisions to make. At its last meeting, the ECB said it is keeping all its options open. Meanwhile, the BoJ faced some pushback when it hiked its short-term rate at the last meeting. It could keep rates unchanged at the October meeting, if only to keep the peace.
The UK will announce its latest budget. The government has not ruled out tax rises. It has not ruled out expenditure cuts, either. So, it could be a budget for austerity as the UK faces higher borrowing costs.
On the corporate front
It is a busy earnings week with some top names from the tech, pharmaceutical, financial and consumer staples sectors on the chopping board. Alphabet (Nasdaq: GOOG) is set to report third-quarter numbers. The main focus of attention will be growth at its cloud business. The market will also be scrutinising the company’s AI capital expenditure. Investors will want to see some evidence of a decent return on investment.
Microsoft (Nasdaq: MSFT) will also be under the microscope when it reports first-quarter numbers. It is expected to report double-digit increases in both revenue and earnings per share. But close attention will be paid to the software giant’s Azure cloud computing business, its Copilot services and the amount of money it is spending to support demand for its AI data centres.
Staying with the Mag 7, Amazon (Nasdaq: AMZN) will report third-quarter numbers. Strong earnings growth is expected from the online retailer. But all eyes could be on Amazon Web Service. Importantly, capital expenditure could be the primary concern, after the company reported that free cash flow has turned negative.
Other tech companies to watch include chipmaker Intel (Nasdaq: INTC), which will report third-quarter numbers and data-storage company Seagate (Nasdaq: STX) with first-quarter earnings. Telecom outfit Verizon (NYSE: VZ) will report third-quarter results and American Tower (NYSEM AMT) will step in with third-quarter earnings, too.
Coca-Cola (NYSE: KO) will bring home its third-quarter report card. The fizzy-drinks maker has the wind in its sails, with earnings and revenue expected to improve again. The market will be looking for volume growth and expansion in operating margin. Elsewhere, the market will be looking for more signs that the nascent turnaround is progressing at Starbucks (Nasdaq: SBUX) when it reports fourth-quarter numbers.
There should be no surprises when a trio of oil companies turn on the taps with third-quarter earnings. Shell (NYSE: SHEL), ExxonMobil (NYSE: XOM) and BP (NYSE: BP) will get the ball rolling. High oil prices should provide the necessary fuel for earnings growth, as margins soar at the three integrated oil companies.
Visa (NYSE: V) and MasterCard (NYSE: MA) could provide valuable insights into the spending habits of households when they report full-year and third-quarter results. Meanwhile, HSBC (SEHK: 0005) and Standard Chartered (SEHK: 2888) are expected to highlight growth at its wealth-management businesses as the rich get increasingly richer.
Other companies to watch include GSK (NYSE: GSK), Eli Lilly (NYSE: LLY), Merck (NYSE: MRK) and Bristol Meyer Squibb (NYSE: BMY) from the pharmaceutical sector, and Ford (NYSE: F)and Stellantis (NYSE: STLA) from the car-making arena.
At the local level, a bunch of REITs are set to announce results. They include CapitaLand Ascott Trust (SGX: HMN), Mapletree Industrial Trust (SGX: ME8U) and Mapletree Pan Asia Commercial Trust (SGX: N2IU).
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Get more stock updates on our Facebook page. Click here to like and follow us on Facebook.Microsoft, Coca-Cola, Visa, Starbucks and MasterCard are part David Kuo’s Asian Consumer Portfolio. American Tower, CapitaLand Ascott Trust, MINT and MPACT are part of David Kuo’s KIP. David Kuo also owns shares in Verizon, Shell, BP, HSBC, Standard Chartered and GSK.
