The US will report inflation numbers for September. Both the headline and core inflation rates are expected to trend lower, which could vindicate the US Fed’s decision to cut interest rates aggressively last month.
The Reserve Bank of India is likely to keep interest rates unchanged at 6.5% for the 10th consecutive meeting to ensure that inflation will remain below its target of 4%. In August, the inflation rate crept up to 3.65%, with the cost of food rising 5.66%.
There are also interest-rate decisions from the Reserve Bank of New Zealand and the Bank of Korea. The RBNZ could cut its cash rate, whilst the Bank of Korea could bow to market pressures and cut its policy rate.
Look out for China’s response to its continually slowing economy. Experts reckon that the Ministry of Finance might be prepared to eat humble pie and fire the big fiscal bazooka to save the blushes of the ruling communist party.
Corporate Events
The US bank earnings season kicks off with Wells Fargo & Co (NYSE: WFC) and JP Morgan Chase (NYSE: JPM) stepping up to the crease. In July, Wells Fargo posted a slight drop in second-quarter net income and set aside US$1.24 billion for credit losses. Worryingly, net interest income fell 9%.
There were no obvious wrinkles when JP Morgan Chase reported first-half numbers in July. It said second-quarter net interest income rose 4% and investment banking revenue jumped 46% thanks to higher fees. Profit was up 27%.
Bang & Olufsen (NYSE: BGOUF) reported a full-year loss of kr17 million on revenue that dropped 6% in July. But the upmarket speaker maker expects revenue to grow around 7% a year during the next two years. It once said that whilst other high-end companies have been competing for a shrinking pool of luxury shoppers, B&O has the advantage of being the only one of its kind to sell its products.
The owner of Uniqlo, Fast Retailing (SEHK: 6288) reported strong growth in every market apart from China in July. It said it is tweaking its China operations by changing its store opening and management strategies. Investors will be hoping it can match its 31% rise in third-quarter profit and 13% jump in revenue.
PepsiCo (Nasdaq: PEP) will report third-quarter results. The soft-drinks maker has warned that consumers have become increasingly more conscious of price. It also said that consumers were changing their shopping habits. Whilst PepsiCo’s results are expected to remain strong, investors will be keen to see how the company has changed its product mix to cope with the changing landscape.
Other companies that are pencilled in results include Top Glove (SGX: BVA) and Domino’s Pizza (NYSE: DPZ). Christmas seems to have come early for rubber-glove maker Top Glove after the US announced that it would increase tariffs on Chinese-made gloves to 50% in 2025 and 100% in 2026. Meanwhile, pizza maker Domino’s could provide some interesting insights into the fast-dining market as diners face increasing pressures on their household budgets.
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Disclosure: Fast Retailing and Top Glove are component of DKIP’s ACP and MMM portfolios.
