Top 5 Things to Watch in Markets in the Week Ahead

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Top 5 Things to Watch in Markets in the Week Ahead

By Noreen Burke

Investing.com -- The first big wave of earnings reports will give investors plenty to digest in the coming week, while U.S data could help cement expectations for the Federal Reserve to begin tapering. Figures on third quarter Chinese economic growth on Monday will show the impact of multiple recent hits to the world’s second largest economy. UK inflation data later in the week could reinforce growing expectations for a rate hike by the Bank of England. Meanwhile, the first bitcoin futures ETF is set to begin trading, propelling the digital currency closer to all-time highs. Here’s what you need to know to start your week.

1. Earnings

Dozens of companies will be reporting in the coming week, including Tesla (NASDAQ: TSLA ), Intel (NASDAQ: INTC ) and Johnson & Johnson (NYSE: JNJ ), as the first major wave of third quarter earnings results gets underway.

On Thursday Netflix (NASDAQ: NFLX ) kicks off third quarter reporting for the 'FAANG' group of U.S. tech giants Facebook (NASDAQ: FB ), Apple (NASDAQ: AAPL ), Amazon (NASDAQ: AMZN ), Netflix and Google-parent Alphabet (NASDAQ: GOOGL ).

The video streaming company said "Squid Game" has become its biggest series launch ever and Bloomberg reported that the megahit will create almost $900 million in value for Netflix.

U.S. stocks were higher on Friday and the Dow posted its largest weekly percentage gain since June, after Goldman Sachs (NYSE: GS ) rounded out a strong start to third quarter earnings for the major banks, though investors will stay on the lookout in the coming weeks for signs of impacts from supply chain disruptions and higher costs, especially for energy.

2. U.S. data

The U.S. is to release data on industrial production on Monday followed by reports on building permits and housing starts on Tuesday.

Industrial production is likely to be held back by supply chain problems, but housing data is expected to remain solid, with the recent uptick in mortgage applications pointing to a fresh pickup in activity after a slight slowdown through the spring and summer.

The Fed’s Beige Book is due out on Wednesday and could cement expectations for tapering. Last week’s minutes of the Fed’s September meeting showed that a November announcement is on the cards and tapering could even start later the same month.

3. Chinese GDP

In recent months the Chinese economy has taken a series of blows from the Evergrande-induced property market crisis, outbreaks of the delta variant, an energy crunch, supply bottlenecks and soaring commodity prices.

So, investors will be closely watching Monday's third quarter gross domestic product data, which will be released alongside figures on factory production and retail sales. Economists are expecting growth in the world’s number two economy to have slowed to 5.2% year-on-year, the slowest in a year, from 7.9% in the previous quarter.

China’s real estate sector, a key driver of growth, is reeling from rising defaults, with sales tumbling and construction slowing as Evergrande, once China's top-selling developer, battles against default on more than $300 billion in debts.

4. UK inflation

Data on Wednesday is expected to point to the fastest increase in UK consumer price inflation in nearly nine years in September, with economists forecasting a reading of 3.2% year-over-year.

The report will be keenly watched amid growing expectations for the BoE to hike interest rates before the end of the year to tackle surging inflation, becoming the first major central bank to do so since the start of the coronavirus pandemic.

Surging energy prices and supply-chain bottlenecks mean that the BoE expects inflation to exceed 4% at the end of the year and remain around that level in the first half of 2022.

5. Bitcoin futures ETF

The first U.S.-listed bitcoin futures ETFs are set to launch in the coming week, barring a last-minute objection from the Securities and Exchange Commission.

The ProShares Bitcoin Exchange Traded Fund is scheduled to start trading on the New York Stock Exchange on Tuesday. A day later, the Invesco Bitcoin Strategy ETF, would also be allowed to launch unless the SEC blocks it.

The ETFs will be based on bitcoin futures that already trade on the Chicago Mercantile Exchange rather than the cryptocurrency itself amid regulatory concerns over a potential lack of liquidity and the risk of price manipulation on spot exchanges.

The launch of the ETFs could pave the way for a stream of similar products, potentially fueling a run higher for the world’s largest digital currency which hit peaks of $62,892 on Friday, not far from its all-time highs of $64,778.

--Reuters contributed to this report

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