The final week of October is packed with decisive events for global markets. Between central bank meetings, major tech earnings, and signs of easing tensions between the United States and China, investors face an intense agenda with high volatility potential.
Central Banks in Focus
Four central banks dominate market attention: the Federal Reserve, the Bank of Canada, the European Central Bank, and the Bank of Japan.
- Federal Reserve (Fed): With the benchmark rate at 4.00–4.25%, markets price in a 25 basis point cut to 3.75–4.00%. A confirmed cut would signal a more accommodative stance, likely boosting equities and Treasuries while putting downward pressure on the dollar.
- Bank of Canada (BoC): Rates currently at 2.50%, with an expected 25 bp cut to ease economic slowdown. Such a move could weaken the Canadian dollar and support exports.
- European Central Bank (ECB): Deposit rate at 2.00%. No change expected, but the tone of the ECB communication could influence the euro; a dovish stance may weigh on the currency.
- Bank of Japan (BoJ): Around 0.50%, with no anticipated changes. Any signals of future hikes could strengthen the yen and trigger corrections in Japanese equities.
Macro Agenda of the Week
- Monday 27: US durable goods orders and early headlines from US-China trade meetings set the week’s tone.
- Tuesday 28:Case-Shiller Home Price Index and CB Consumer Confidence are released, along with Australian Q3 CPI, offering insight into US consumer health.
- Wednesday 29: Critical day with BoC and Fed decisions and Microsoft and Alphabet earnings after the US market close. A rate cut combined with strong tech results could trigger a significant risk-on wave. Also, the IEA crude oil inventories report will be released.
- Thursday 30: ECB and BoJ meetings (Wednesday 23:00 ET for US markets) with no rate changes expected, but central bank rhetoric may move the euro and yen. US and German Q3 GDP preliminary reports are released: US forecast 3% (vs. 3.8% in Q2), Germany 0% (vs. -0.3% in Q2).
- Friday 31: Month-end inflation reports: Eurozone CPI and US PCE, alongside market reactions to the week’s announcements and macro revisions. Commodities and bonds may see volatility at month's close.
Corporate Earnings: Tech Giants Take Center Stage
The earnings season intensifies this week:
- Microsoft and Alphabet are the highlights, with a focus on cloud growth and AI investments.
- Apple, Meta, and Amazon also report, completing the “Magnificent Five” picture. Investors look for margins, AI investments, and year-end guidance. Positive signals could lift Nasdaq and risk appetite; weaker guidance could pressure tech valuations.
US-China Talks: Global Impact
Washington and Beijing resume high-level trade discussions aimed at advancing a cooperative framework. Any progress would ease emerging market tensions and support global sentiment, while a stalemate could revive volatility and risk aversion, contributing to recent declines in US equities.
Oil: Between Supply and Diplomacy
Following last week’s sanctions on key Russian oil companies, crude remains highly volatile amid OPEC+ production adjustments and expectations of increased demand if US-China progress materialises. Trade détente could push prices higher, while signs of global slowdown would apply downward pressure. Trading ideas for the week are available on FBS’s website and Telegram channel.
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