Morning Bid: Event risks galore this week

Preview of the Week in European and Global Markets by Vidya Ranganathan

The week ahead in financial markets promises to be action-packed, with a mix of pivotal events. Key highlights include Japan’s election results, an intense U.S. corporate earnings calendar, Britain’s upcoming budget, and the U.S. election that’s just around the corner.

Following Japan’s weekend election, the yen has fallen to a three-month low, while Japanese equities are rallying. The ruling coalition lost its parliamentary majority, sparking expectations of prolonged political uncertainty and the potential for increased fiscal stimulus.

The political landscape could add challenges for the Bank of Japan, whose task of policy normalization is already complicated by Japan’s delicate economic conditions and volatile markets. The BOJ is widely expected to maintain its current policy stance in its meeting concluding on Thursday.

While Monday’s economic data is light, the rest of the week brings crucial releases, including the eurozone’s third-quarter GDP and inflation data, which could reinforce the European Central Bank’s cautious approach.

The U.K. will be closely watched as the new Labour government presents its inaugural budget on Wednesday. Investors are already reacting, selling off U.K. stocks and government bonds amid uncertainty over how Finance Minister Rachel Reeves will manage high debt, increased public spending, and her pledge to avoid income tax hikes.

It’s also peak earnings season on Wall Street, with over 150 companies in the S&P 500 set to announce their third-quarter results this week. Five of the “Magnificent Seven” U.S. tech giants are among those reporting: Alphabet (GOOGL) on October 29, Microsoft (MSFT) and Meta Platforms (META) on October 30, and both Apple (AAPL) and Amazon (AMZN) on October 31.

This series of market-moving events will carry into the following week, including U.S. Election Day on November 5 and the Federal Reserve’s next policy decision on November 7, which may keep investors on edge in the days ahead.

Adding to the significance, the U.S. jobs report on November 1 will be critical. Investors are closely monitoring whether a stronger-than-expected economic performance might reduce the need for as many Fed rate cuts as currently anticipated.

Key Market Drivers for Monday:

• Speakers: ECB Vice President Luis de Guindos is scheduled to speak in Madrid.
• Earnings: Koninklijke Philips NV (PHG)