Key events to watch in the week ahead: 28 October – 3 November 2024

This week’s overview

Wall Street is on track to deliver its first loss in seven weeks, as a surge in US Treasury yields capped risk sentiments, along with some profit-taking in heavyweight tech names ahead of their key result releases next week. A tone of caution is also expected to linger as we inch closer to the upcoming US elections, which is currently too close to call.

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

US 3Q 2024 earnings season: MCD, GOOG, AMD, SBUX, META, MSFT, COIN, MSFT, AAPL, AMZN, INTC, XOM

The US earnings season will head into its busiest week, with releases from five out of the seven Magnificent Seven stocks. Thus far, US earnings momentum has been promising. Out of the 36% of S&P 500 companies which have released their results, 79% have exceeded earnings expectations, in line with previous quarters’ outperformance.

30 October 2024 (Wednesday, 8.30am SGT): Australia’s monthly consumer price index (CPI) indicator

The most recent monthly CPI indicator (for August, released in late September) showed a sharp fall in inflation. Specifically, the monthly CPI indicator rose by 2.7% YoY in August, easing from 3.5% in July. The ex-volatile measure eased to 3.0% in August from 3.7% in July. Annual trimmed mean inflation eased to 3.4% YoY in August from 3.8% in July.

The preliminary expectation for the Sep 2024 quarter (Q3) is for headline inflation to rise by 0.4% QoQ for an annual rate of 2.8%. The Trimmed Mean is expected to rise by 0.7% QoQ, which would see the annual rate of Trimmed Mean inflation ease to 3.4%.

The Australian interest rate market is pricing 8 basis point (bp) of a 25 bp Reserve Bank of Australia (RBA) rate hike for December. If the Trimmed Mean prints at 3.4% or lower next week, it will significantly increase the chances of an RBA rate cut before year-end.

30 October 2024 (Wednesday, 8.30pm SGT): US advance estimate for Q3 gross domestic product (GDP)

The US GDP for Q2 2024 showed an annualized growth rate of 3.0% in real terms, a slight upward revision from earlier estimates of 2.8%. This is driven by gains in consumer spending, private inventory investment and non-residential fixed investment, while residential investment and government spending declined slightly.

Ahead, expectations are for US Q3 GDP to grow 3.0% quarter-on-quarter (QoQ), once again reflecting resilient economic conditions, which should fuel soft landing hopes and support a gradual pace of easing in Fed’s monetary policies. The Atlanta Federal Reserve (Fed) GDPNow growth estimate for the third quarter is projecting a stronger Q3 growth of 3.4%, leaving room for upside surprises.

30 October 2024 (Wednesday, 5pm SGT): Eurozone’s Q3 flash GDP

Last quarter (Q2), the Eurozone's GDP expanded by 0.2% QoQ, easing from 0.3% in the prior quarter. This saw the annual rate of GDP at 0.6% YoY, in line with expectations.

Within the details, France and Spain recorded higher-than-expected growth while German growth unexpectedly contracted. This sparked concerns that the fall in German GDP, traditionally the economic heart of Europe, was due to the disruption of its business model based on cheap energy from Russia and vibrant trade with China.

Since then, forward indicators, including business surveys, have pointed to a broader slowdown. The decline in forward-looking growth indicators has been accompanied by a decline in inflation, which saw the European Central Bank (ECB) deliver a third 25 bp interest rate cut last week.

The rates market is fully priced for another 25 bp cut from the ECB at its December 12th meeting, with a 23% probability of a heftier 50 bp cut.

31 October 2024 (Thursday, 11am SGT): Bank of Japan’s (BoJ) interest rate decision

Having raised its short-term policy target to 0.25% from a zero-to-0.1% range back in July, the central bank has taken on a more patient stance ever since. It is widely expected to keep short-term interest rates unchanged next week, while making gradual progress in tapering its bond purchases.

Recent comments from the BoJ Governor Kazuo Ueda did not seem to suggest any strong policy commitment ahead, with him saying that it is "still taking time" to sustainably achieve its 2% inflation target. Uncertainties around the upcoming US election should also deter policymakers from making any strong guidance.

Fresh economic projections will be scrutinised for any hints on the timeline of upcoming rate hikes. While some wage growth has been observed, particularly among small and medium-sized enterprises, concerns about declining consumer demand due to rising costs should continue to linger, which may call for some reservations in raising rates too soon.

1 November 2024 (Friday, 8.30pm SGT): US September non-farm payroll report

For September, US added 254,000 jobs, far above the 147,000 expected. While July and August data initially showed weaker gains, subsequent revisions increased these numbers, which overall reinforce the view of resilient US labour conditions.

For the upcoming October data, expectations are for US to add 140,000 jobs in September, which reflects some cooling from the previous 254,000. That said, markets may attribute some labour weakness to distortions from Hurricane Helene and Milton, along with US port strikes, which may be seen as temporary.

The unemployment rate is expected to remain unchanged at 4.1%. Average hourly earnings may ease slightly to 0.3% month-on-month, versus the previous 0.4%.

The Fed will likely take the upcoming US job report into consideration when determining its rate cut in November, as they seek a balance between maintaining employment strength and controlling inflation. Thus far, the broader trend in labour conditions reflects resilience, which should keep expectations anchored for the Fed to take smaller 25 bp cuts ahead.