Key events to watch in the week ahead: 14 – 20 October 2024

This week’s overview

October continues to mark a new high for the S&P 500, as tech stocks regained traction despite a less-dovish view for the Federal Reserve (Fed), which brought a surge in US Treasury yields. Geopolitical tensions in the Middle East rock on as well, but amid the anticipation for Israel’s response, market attention will likely turn to the upcoming earnings season for more cues to sustain the market rally.

Looking into the new week, here are five key events to watch.

US 3Q 2024 earnings season: Bank of America, Johnson & Johnson, Goldman Sachs, Citigroup, Morgan Stanley, Netflix

The major US banks’ earnings will resume next week, with Bank of America, Goldman Sachs and Morgan Stanley on the radar. Netflix will be the key focus as well. Despite beating subscriber targets in 2Q 2024, the company issued a cautious guidance for 3Q and said its advertising business would not become a primary driver of revenue growth until at least 2026.

Subscriber gains for 3Q 2024 would also be lower than a year ago when it had just started the password clamp-down, with Refinitiv estimates pointing to a 13.8% growth in overall subscribers, down from the 16.5% prior.

17 October 2024 (Thursday, 8.30am SGT): Australia’s employment change

Last month (August), the Australian economy added 47.5k jobs, stronger than the 25k gain the market had expected. The unemployment rate was stable at 4.2%, remaining at its highest since November 2021, and the participation rate stayed at a record high of 67.1%.

This month, the preliminary expectation is that the Australian economy will create 25k jobs and that the unemployment rate will remain at 4.2%. The Australian interest rate market is pricing in 10 basis points (bp) of the Reserve Bank of Australia (RBA) rate cuts for December and 46 bp of rate cuts by May 2025.

17 October 2024 (Thursday, 8.45pm SGT): European Central Bank (ECB) interest rate decision

At its last meeting in September, the ECB continued to ease rates with a 25 bp cut to its key deposit rate facility to 3.5%, in line with expectations. It followed a similar move in June after a hold in July. ECB President Lagard indicated a continuation of the ECB’s data-dependent and “meeting by meeting” approach, dampening expectations of a follow-up cut at the next meeting in October.

However, since then, weak growth data and strong disinflationary momentum have highlighted the need for further easing of monetary policy. The Euro Area rates market is pricing in a 100% chance of a 25 bp ECB rate cut at next week's meeting. Another 25 bp rate cut is fully priced for the ECB’s meeting in December, which would see the deposit rate end the year at 3%.

18 October 2024 (Friday, 7.30am SGT): Japan’s inflation rate

Last month, the August read for Japan’s inflation saw core pricing pressures edging higher to 3.0% from previous 2.8%, while headline inflation stay unchanged at 2.8%. This marked the 29th consecutive month, where inflation has been above the Bank of Japan (BoJ)’s 2% target. As such, further policy normalisation may remain the path that the BoJ will undertake, but the timing and scale of additional hikes will be the central focus for markets.

Back in July this year, the central bank has raised interest rates by a higher-than-expected 15 bp to 0.25%. However, policymakers were more cautious in further hikes, keeping rates unchanged in September and leaning towards a dovish rhetoric amid previous strengthening in the yen. The dovish tone was echoed by Japan’s new Prime Minister, Shigeru Ishiba, as well, which is an unusual shift from his reputation of being a monetary hawk.

As of today (11 Oct), markets are pricing for a 71% probability of a 10 bp rate hike in December. Any further rise in pricing pressures, especially in the core aspect, could further anchor views of another rate hike by year-end. The BoJ was only projecting a 2.5% read in core inflation in March 2025, so more persistence in core inflation will likely challenge that view.

18 October 2024 (Friday, 10am SGT): China’s 3Q gross domestic product (GDP)

China’s 2Q 2024 GDP came in softer than expected at 4.7% year-on-year, significantly underperforming the 5.1% consensus. Weak consumption and property sector woes continued to be a drag on growth, which puts its 5% GDP growth target in jeopardy. That may explain its recent economic stimulus package unleashed in late-September, which highlights more urgency in addressing its economic slowdown.

While the impact of recent measures may not be reflected in the upcoming numbers just yet, the data will offer greater clarity over how the country’s economic conditions are holding up and whether more needs to be done from authorities.

Expectations are for China’s September retail sales to improve to 2.4% year-on-year from the 2.1% prior, while industrial production may improve to 4.6% from the 4.5% prior. Fixed asset investment may remain subdued at 3.3% versus previous 3.4%. The 3Q GDP is expected to expand 4.6% from a year ago, which may drag year-to-date GDP growth slightly below target at 4.8-4.9%.