Chinese growth and corporate earnings in the United States and Europe, including results from the big-hitting FAANGs, will give markets plenty to digest in the week ahead, while Turkey’s central bank is set to meet after another midnight reshuffle.
And for many, the big question: Is Christmas cancelled?
1/CHARTING CHINA
From an Evergrande-induced property market crisis to power shortages halting production lines supplying Apple and Tesla, https://www.reuters.com/world/china/china-sept-export-growth-unexpectedly-picks-up-imports-slow-2021-10-13 the world’s no. 2 economy has plenty to worry about.
Data released on Monday showed gross domestic product (GDP) grew 4.9% in July-September from a year earlier, the weakest clip since the third quarter of 2020 and missing forecasts.
Overall industrial output edged just 3.1% higher in September from a year earlier, marking the slowest growth since March 2020, during the first wave of the pandemic.September new construction starts slumped for a sixth straight month, the longest spate of monthly declines since 2015.
But retail sales bucked the negative trend to grow 4.4%, faster than forecasts and the 2.5% growth in August, and the surveyed nationwide jobless rate fell from 5.1% to 4.9%.
The latest readings have increased expectations that policymakers will do more to shore up growth and to prop up the faltering recovery.
-China’s economy stumbles on power crunch, property woes
Graphic on China growth slowing:
https://fingfx.thomsonreuters.com/gfx/mkt/myvmngkjzpr/Pasted%20image%201634212277756.png
2/PROFIT STREAM
Netflix kicks off third quarter reporting on Thursday for the ‘FAANG’ group of big U.S. tech and growth companies of Facebook, Apple, Amazon, Netflix and Google-parent Alphabet.
The video streaming company said “Squid Game” has become its biggest series launch ever https://www.reuters.com/lifestyle/skoreas-squid-game-is-netflixs-biggest-original-show-debut-2021-10-13, while last month “The Crown” won the best drama series Emmy award. Netflix also bought video game creator Night School Studio https://www.reuters.com/technology/netflix-rolls-out-mobile-games-users-select-european-markets-2021-09-28 in a push to diversify.
Netflix’s stock price has climbed some 16% in 2021, broadly in line with the S&P 500 and in the middle compared to the other FAANG stocks. Other companies due to report results next week include Tesla, Johnson & Johnson, and Intel.
-Netflix buys first video game studio, rolls out mobile games
-U.S. earnings seen strong, but supply chains and costs worry investors
Graphic: “FAANG” stocks in 2021 https://graphics.reuters.com/USA-STOCKS/FAANG/gkvlgxxqlpb/chart_eikon.jpg
3/INFLATION SPOTTING
Markets will look for signs that production bottlenecks, supply chain strains, labour shortages and surging energy prices https://www.reuters.com/business/energy/power-crunch-pressures-europes-silicon-ferro-alloy-producers-2021-10-07 are starting to undermine future profits when Europe’s earnings kick off.
With rates hikes in the works to fend off inflation https://www.reuters.com/business/money-markets-ramp-up-global-rate-hike-bets-add-pressure-central-banks-2021-10-12 stickiness, financial and energy sectors are set to thrive as rising yields dent the appeal of so-called growth stocks.
Tasters of the third-quarter earnings season from luxury giant LVMH, tech star SAP https://www.reuters.com/technology/sap-lifts-full-year-outlook-more-customers-shift-cloud-2021-10-12 and steelmaker Outokumpu so far left no bitter after-taste. Now it is the turn of blue chips such as ASML Holding, Unilever, Barclays and ABB.
Earnings are seen jumping 46.7% year-on-year for pan-European STOXX 600 index constituents, though the gap between positive and negative revisions has been shrinking, vindicating the narrative Europe is cruising past peak growth.
-Price pinch: global economy caught in perfect storm
Graphic: Earnings revisions https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrazzlpm/Pasted%20image%201634293481215.png
4/CHRISTMAS, CANCELLED?
A year after coronavirus lockdowns dampened festive spirits, world leaders will be hoping supply disruption won’t be the Grinch that stole Christmas.
It may be more than two months away, yet panic buying of turkeys and festive goodies has begun amid supply chain chaos.
White House officials warn Americans may face https://reut.rs/30oHs5u higher prices and empty shelves this Christmas. The busy ports of Los Angeles and Long Beach are expanding operations to unload an estimated 500,000 containers waiting on cargo ships offshore.
Britain has urged consumers to buy normally after containers carrying toys and electrical goods were diverted from its biggest port because it was full https://www.reuters.com/article/us-britain-truckers-idUSKBN2H30GQ.
Friday’s October flash purchasing managers indices (PMI) from Australia, Europe and elsewhere might illustrate supply chain pain. Germany business sentiment https://reut.rs/3aDm3Hm is already suffering.
– Biden enlists Target, Walmart to fix bottlenecks threatening holiday sales
Graphic: Long Beach Anchorage congestion (number of vessels) https://fingfx.thomsonreuters.com/gfx/mkt/gdpzywwbjvw/theme1310.PNG
5/EMERGING WOES
Central banking is rarely dull in emerging markets, but Turkey outstrips most others for excitement.
A fresh batch of policy makers will meet https://www.reuters.com/world/middle-east/revolving-door-turkeys-last-four-central-bank-chiefs-2021-10-08 on Thursday after President Tayyip Erdogan instigated another reshuffle, clearing the way for more rate cuts in the face of stubbornly high inflation and sending the lira to fresh record lows.
But central banks elsewhere are busy ramping up rates. Hungary is expected to nudge up its benchmark https://www.reuters.com/article/hungary-cenbank-idUSL8N2QX22S on Tuesday to tackle a rise in inflation which prompted sharp rate rises elsewhere in central Europe.
Russia’s central bank will likely follow https://www.reuters.com/article/russia-cenbank-ofz/russian-central-bank-says-foreign-buyers-flock-to-secondary-ofz-market-idUSL8N2R928K on Friday as policy makers have come out in droves warning of rising price pressures and unanchored inflation expectations.
-Erdogan’s central bank overhaul clears way for more rate cuts
Graphic: Lira timeline October 15 https://fingfx.thomsonreuters.com/gfx/mkt/zgpomrnrmpd/Lira%20timeline%20October%2015.PNG
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China growth slowing https://tmsnrt.rs/3va8F7l
“FAANG” stocks in 2021 https://tmsnrt.rs/3azwL1M
Earnings revisions https://tmsnrt.rs/3mTIuhr
Long Beach Anchorage congestion (number of vessels) https://tmsnrt.rs/3ACujlL
Lira timeline October 15 https://tmsnrt.rs/3lFTEqK
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(Reporting by Kevin Buckland in Tokyo, Danilo Masoni, Dhara Ranasinghe, Julien Ponthus and Karin Strohecker in London, Lewis Krauskopf in New York; compiled by Karin Strohecker; editing by Alexander Smith)
