This week, several pivotal trends are drawing the attention of investors, particularly in the realms of eurozone economic performance, central bank interest rate decisions, and the quarterly earnings reports of major corporations.
A major highlight will be the release of the flash manufacturing Purchasing Manager Index (PMI) for the Eurozone, the United Kingdom (UK), and the United States (US).
Furthermore, the decision by the Bank of Canada regarding interest rates will provide crucial insights into the trajectory of major central banking policies.
The People’s Bank of China is also expected to announce its key mortgage rates, which could significantly influence market sentiment, especially in sectors related to commodities, luxury, and mining.
In the United States, Tesla and Amazon’s upcoming quarterly results are anticipated to give investors valuable insights into the growth trajectories of these major tech players.
Economic Update: Europe
S&P Global is set to release its manufacturing PMI for vital European economies, including Germany and France.
Recent data indicates a deeper contraction in manufacturing activity, with September figures hitting the lowest point this year. Germany experienced the most significant decline in factory conditions observed over the past year, while Spain displayed the strongest performance in September.
France’s manufacturing PMI has contracted for the 20th consecutive month, although it was revised upwards to 44.6, signaling modest activity. Predictions suggest an improvement in manufacturing for October, though it will still be in contraction.
On the services front, eurozone activity has expanded for the eighth straight month in September, albeit at the slowest pace since March. Germany has shown six months of growth in its services PMI, while France’s services sector has contracted for two consecutive months. These trends are expected to continue into October.
This deteriorating economic data highlights a deceleration in growth across the region, potentially prompting the European Central Bank (ECB) to quicken its rate-cutting initiatives. Nonetheless, ECB President Christine Lagarde reassured last week that a recession is not anticipated, and a soft landing for the economy remains likely.
In contrast, the UK has experienced notably stronger business activity, with both manufacturing and services PMIs remaining in expansion territory for September. Manufacturing has consistently grown since May, and services have shown continuous expansion since November 2023. Expectations suggest continued growth in both sectors for October.
Economic Update: United States
In the US, attention will also be directed towards business activity within the manufacturing and services sectors. The manufacturing PMI has been in contraction since July, with recent data suggesting a further softening trend.
September’s manufacturing PMI marked its lowest level since June 2023, driven by weaker demand and political uncertainties. Conversely, the services sector has remained robust, with PMI consistently exceeding 55 since June.
Tesla and Amazon’s quarterly earnings will be crucial for market sentiment. Investors are eager to evaluate Tesla’s revenue growth and gain insights into its Robotaxi and Full-Self Driving (FSD) initiatives.
Tesla’s third-quarter car deliveries did not meet market expectations, following a disappointing Robotaxi event, leading to a 16% drop in its shares throughout October. Analysts forecast Tesla will report earnings of $0.49 (€0.45) per share on revenues of $24.98 billion (€23.04 billion).
For Amazon, key metrics will include the performance of its cloud division, AWS, and advertising revenues. Consensus estimates from Zacks predict earnings per share to reach $1.14 (€1.05), marking a 34% increase year-on-year.
Economic Update: Asia-Pacific
In the Asia-Pacific region, China is preparing to announce its decisions regarding the 1-year and 5-year Loan Prime Rate (LPR). The 1-year LPR serves as the benchmark for most corporate and household loans, whereas the 5-year LPR is critical for mortgage rates.
In September, the People’s Bank of China unexpectedly held both benchmark rates steady at 3.35% and 3.85%, respectively. However, following a series of stimulus measures in September, a rate cut of 0.25% is anticipated this week.
Economic Update: Canada
The Bank of Canada (BoC) is forecasted to implement a noteworthy rate cut of 0.5% this week, according to consensus from Reuters.
Canada’s headline inflation dipped to 1.6% year-on-year in September, alongside weaker economic growth and a rising unemployment rate.
The BoC has been proactive in cutting interest rates this year, having already reduced rates by 0.75% since June.
Photo credit & article inspired by: Euronews
