Week ahead: 16-20 October

Monday:

New Zealand quarterly CPI:

A slow start to the week sees little from Europe and the US. However, Monday evening will see New Zealand CPI inflation released, with this quarterly gauge expected to move sharply higher. Coming off the back of three consecutive declines, market forecasts of a rebound from 1.1% to 1.9% bring concerns over the potential direction of travel. The RBNZ remain data dependant, and this is the kind of data that could push them to change tact if it comes in hot.

Tuesday:

UK Jobs report:

The recent rise in unemployment will no doubt concern the BoE, rising from 3.8% to 4.3% in just three months. Whether this is indicative of an economy on the turn remains to be seen, but any further upside for unemployment will be notable given expectations that it will finally plateau out. Also watch out for average wages, which are predicted to roll over after a worrying rise into 8.5% (7.8% without bonuses). Given this is a proxy for inflation, a reversal lower would come as a positive indication that inflation pressures could continue to ease.

US Retail Sales (September):

Despite a boost in gasoline prices, US consumers are showcasing enduring spending resolve. Following the 0.5% and 0.6% retail sales observed in July and August, September anticipates a slight deceleration to 0.2%. A noticeable contraction in September’s U.S. consumer credit numbers underpins the risk of potentially lower results.

Goldman Sachs Q3:

Goldman Sachs steps into the spotlight with its Q3 figures. Notwithstanding Q2 revenue surpassing forecasts at $10.9bn, profits stumbled, falling 58% in part due to a $584m GreenSky impairment and a $485m real estate write-down. Current projections anticipate a decline in revenues to $11.3bn and profit falling to $6.35 per share in Q3. With a number of their peers having outperformed in the week just gone, expectations of a beat for Goldman Sachs will raise the bar somewhat.

Wednesday:

China GDP (Q3):

China’s Q3 GDP data appears to hint at a modest improvement to their economic picture, with forecasts proposing a 1% growth compared to Q2’s 0.8%. With retail sales, industrial production, and fixed asset investment also due for release, traders will be afforded an insight across the spectrum for an economy that has been under pressure of late.

UK Consumer Price Index (CPI) (September):

The BoE left markets astounded by maintaining the 5.25% interest rate last month, following a dip in the core CPI from 6.9% to 6.2% and the headline CPI to 6.7% in September. Although producer price index (PPI) data showcased a diminishing inflation trajectory, elevated fuel prices may uphold inflation. The impact of rising energy prices could also spoil the party for headline CPI too, with the recent above-expectations readings in the US signalling the potential trouble faced by central banks looking to drive CPI down towards target.

Bank of America Q3:

Despite Q2 revealing a 19% profit surge to $7.41bn and an 11% revenue increase to $25.33bn, Bank of America’s shares have ebbed to their lowest since October 2020. For Q3, expectations lean toward a $25.17bn revenue and profit of $0.82 per share.

Netflix Q3:

Netflix’s Q3 outlook indicates $8.5bn in revenue and a rise in subscribers, with profits potentially hitting $3.52 a share, even amidst an ongoing writers and actors strike. There is some hope that efforts to curb password sharing could see membership rise. However, with competitor YouTube gathering momentum, there will be some concerns over whether users pay up or move on.

Tesla Q3:

After a reduction in vehicle deliveries to 435,059 (beneath forecasts), Tesla’s Q3 revenue is anticipated to mildly drop to $24.6bn, with profits potentially landing at $0.77 per share. Lower deliveries and price cuts across China and the US vehicles bring the potential for lower margins and a hit to EPS.

Thursday:

Australian jobs report:

The Australian jobs market appears to have held up despite concerns around the Chinese economy, with unemployment failing to rise beyond the 3.7% high set in February. That brings confidence that the economy could weather further upside for rates if needed. Last month saw outperformance for the employment change figure, which is expected to pull back somewhat this time. In either case, the Australian jobs market looks good across both metrics.

Friday:

UK retail sales:

Concerns around the UK economy have emerged as unemployment rate pushes sharply higher over recent months. For the most part consumers have appeared willing to continue paying more for less. However, the destruction of savings and rising mortgage payments will ultimately have an effect on consumption levels. When that does happen, it will likely help bring down inflation. With that in mind, watch out for any signs that consumption levels are finally on the turn. Markets predict a decline back into negative territory (-0.4%) following last month’s 0.4% gain.