Take Five: Rate cuts and politics, say no more
Oct 4 (Reuters) -It's a packed week ahead with U.S. inflation data, the start of Q3 earnings, a French budget and possibly a big rate cut from New Zealand.
Investors are also on edge as Middle East tensions escalate, while Japan's new Prime Minister Shigeru Ishiba is in the spotlight.
Here's all you need to know about the week ahead in global markets from Lewis Krauskopf in New York, Yoruk Bahceli in Amsterdam, Karin Strohecker and Amanda Cooper in London and Kevin Buckland in Tokyo.
1/ ONE YEAR OF WAR
One year on from Hamas' Oct. 7 attack on Israel and the region looks on the brink of a sprawling war that could potentially reshape the oil-rich Middle East.
The conflict, which has killed more than 42,000 people, the vast majority in Gaza, is spreading. Israeli troops are now in neighbouring Lebanon, home to Iran-backed Hezbollah; Iran launched a large scale missile attack on Israel earlier this week.
Global markets have remained broadly unfazed. Oil prices, the main conduit for tremors further afield, have jumped about 8% this week, but soft demand and ample supply globally have kept a lid on gains. A further escalation between Iran and Israel could change that, especially if Israel strikes Iran's oil facilities, an option that U.S. President Joe Biden said was under discussion.
The scars of the conflict are visible on Israel's economy, which has suffered a number of sovereign downgrades and seen its default insurance spike and bonds slide.
2/ BUSY TIMES
U.S. third-quarter earnings season is about to kick into gear, posing a test for a stock market near record highs and trading at elevated valuations.
JPMorgan Chase JPM.N, Wells Fargo WFC.N and BlackRock BLK.N report on Friday. Other results earlier in the week include PepsiCo PEP.O and Delta Air Lines DAL.N. S&P 500 companies overall are expected to have increased Q3 earnings by 5.3% from a year earlier, according to LSEG IBES.
Thursday's September U.S. consumer price index, meanwhile, will be closely watched for signs that inflation is moderating.
Investors are already anticipating hefty rate cuts, after the Federal Reserve kicked off its easing cycle last month.
Elsewhere, investors will seek to gauge the economic fallout from a dockworker strike as U.S. East Coast and Gulf Coast ports reopened on Thursday.
3/ A RECKONING
France's new government presents its long-awaited budget to parliament on Thursday. It's planning a 60-billion-euro belt-tightening drive, around 2% of GDP, next year.
It reckons spending cuts and tax hikes should bring the deficit, seen rising to 6.1% this year in the latest upward revision, to 5% by end-2025. The target date for reaching the euro zone's 3% deficit limit is also being pushed back to 2029 from 2027.
That's bad news just ahead of rating reviews kicking off with Fitch next Friday.
Markets are not impressed. Having eased slightly, the extra premium France pays for its 10-year debt over Germany's widened back to just under 80 bps, near its highest since August.
Ultimately, what may matter more is whether Prime Minister Michel Barnier can pass the budget, given a divided parliament that has investors questioning how long his government will last.
4/ FEELING SHEEPISH
A reluctant joiner to global easing, the Reserve Bank of New Zealand is catching up fast.
It meets on Oct. 9 and traders reckon the central bank could follow the Fed's example and cut rates by half a point.
The RBNZ cut rates by 25 bps to 5.25% in August, a year ahead of its own projections.
Markets price in a drop below 3% by end-2025. This will still be above where traders think U.S. and euro area rates will be.
Shorter-term investors are neutral towards the kiwi, but hedge funds have lapped it up this year.
Positioning and potentially higher rates than others might insulate New Zealand's currency. So could the return of so-called carry trades and in this case, essentially a bearish bet on the yen in favour of bullish ones on high-yielders such as the kiwi.
5/ POLL POSITIONING
When Shigeru Ishiba surprised markets by winning the contest to become Japan's prime minister, investors rushed to re-position themselves for higher interest rates.
A week on and the landscape looks different, as Ishiba back-flipped not just on monetary policy, but on prior market-unfriendly support for higher corporate and capital gains taxes.
It's perhaps not surprising for a hawk to hide his talons with a snap election looming on Oct. 27.
Even so, Ishiba was unabashedly blunt, saying after a meeting with the Bank of Japan - whose independence Ishiba has pledged to honour - that the economy is not ready for further rate hikes.
The yen, which had been surging, slid past 147 to a six-week trough by Thursday. Japanese stocks rebounded from their steepest slide since early August.
Check back in a month from now for any further policy flip-flops.
Q3 earnings seen positive for most S&P 500 sectors https://reut.rs/3Bv5SNg
Oil price wary amid prospects of war escalation https://reut.rs/3zM4k0O
France's budget gap seen coming in double the EU's limit https://reut.rs/4eRTyoJ
Japan PM's policy flip-flop https://reut.rs/4dzuD86
New Zealand's inflation and interest rate https://reut.rs/4eLyfFc
Graphics by Kripa Jayaram, Pasit Kongkunakornkul, Vineet Sachdev; Compiled by Dhara Ranasinghe; Editing by Sonali Paul
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
