Morning Brief – The Week Ahead

During the upcoming trading week the release of Chinese economic data, the results of the Chinese Communist Party’s (CCP) National Congress meeting, and the UK CPI headlines the economic docket.

Traders will also be looking to earning data from several important American companies. In early week trade we see results from Bank of America, Charles Schwab, Bank of New York/Mellon, J&J, Netflix, Goldman Sachs, Intuitive surgical, Interactive brokers, and United Airlines.

As the week hots up we also see results from, Tesla, Procter & Gamble, IBM, Travelers, Alcoa, AT&T, Freeport-McMoRan, Dow, Whirlpool, Verizon, American Express and Schlumberger.

Traders will be on the watch for Chinese GDP data for the third fiscal quarter as it will provide the latest insight into the health of the world’s second-largest economy.

The results are expected to show a recovery from the prior quarterly contraction with the quarter-on-quarter metric forecast at 3.8% vs prev. -2.6% and with year-on-year growth seen accelerating to 3.5% vs prev. 0.4%.

Q2 GDP was disappointing and came in at its slowest pace since the start of the pandemic due to lockdowns and COVID restrictions affecting the two most populous cities of Shanghai and Beijing as China enforced a strict zero policy and with supply chain disruptions impacting the manufacturing hub.

Traders also need to be on watch for the potential re-lection of Chinese President Xi Jinping. Expect a market rally in Chinese stock if he is reinstated as widely expected.

The meeting occurs every five years and will decide on China’s top positions for the next five years. Any hints about China’s future direction will be followed closely on a global scale, with China being the world’s second-largest economy and with one of the largest military forces at a time of heightened geopolitical tensions.

Looking at UK CPI, expectations are for year-on-year CPI to climb to 10.1% from 9.9% with the core year on year metric set to rise to 6.4% from 6.3%.

This time around, analysts expect a similar story after petrol prices fell by 4.1% on average in September and the second-hand car market continued to soften.

The report will likely be viewed as an input to the November Bank of England meeting, however, the release might be of lesser significance for the immediate policy outlook compared to prior months given the impact of fiscal events on the UK economic outlook.