News & Analysis

Week Ahead: US Election Polls, Brexit, ECB Meeting, Q3 GDP, and Tech Giants Earnings Results

October 26, 2020

By Deepta Bolaky
 @DeeptaGOMarkets

Investors are gearing up for an eventful week with plenty of economic data, big tech earnings and geopolitical events. The predominant themes remain the US election, Brexit negotiations, central banks guidance and the virus woes.

Equity Markets

Investors will likely continue to monitor the same dominant themes over the following days.

US Election Polls

Investors will be busy monitoring the polls and updates ahead of the most-awaited political event of the year 2020. Leading up to next week’s Presidential Election, the recent polls show that the former Vice President Joe Biden’s lead widening over the incumbent President Donald Trump in the presidential race. In a pandemic-induced environment, investors are less concerned with higher taxes by the Democratic Party but are looking up to the possibility that a contested US presidential election is becoming less likely.

Investors are betting on a unified government and the size of the stimulus package.

Brexit

Is UK Prime Minister Boris Johnson waiting for the outcome of the US Presidential Election? It appears that many senior officials believe that the UK Prime Minister is awaiting for some clarity as a trade deal with the US may be in jeopardy if Joe Biden wins. It will likely be another volatile week for the UK markets with more negotiations updates, US election and the rising number of coronavirus cases and associated lockdown measures in the country.

Central Banks 

Major central banks like the ECB, BOJ and BoC will hold their policy meetings this week. With Europe suffering record coronavirus threatening to paralyse the continent once again, the immediate attention will be on the ECB this week. While markets participants are not expecting any policy changes at this meeting, the focus will be on the tone of the policymakers and the measures that may be undertaken in the near future to brace for the economic risks associated with the new social restrictions. 

US Earnings

Aside from geopolitics and virus concerns, attention will be on the US corporate earnings season. Tech giants will stand out amid a busy earnings calendar – Thursday will be a big day with Amazon, Alphabet Inc, Apple, Facebook and Twitter reporting their quarterly earnings.

Key Economic Data to Watch

Q3 GDP 

Amid a series of key economic releases and central banks meetings, preliminary Q3 GDP figures in the US and Europe will gather much attention. 

Euro Area GDP: Given the rapid rise of infections in Europe, investors will assess any expansion of the eurozone economy against the risks of another wave of coronavirus outbreak as markets expect a dire outlook for the fourth quarter.

US GDP: All eyes will be on the world’s largest economy. Real gross domestic product (GDP) decreased at an annual rate of 31.4 percent in the second quarter of 2020. Ahead of the election date, it will be interesting to see how the US economy has rebounded in Q3. 

Aussie Inflation Data

Recently, the RBA policymakers provided more insights on the debates of lowering interest rates without necessarily going into negative rates. The inflation data this week will be a key determinant of gauging the actions of the RBA in the November meeting.

Commodities

Oil

Crude oil prices were underpinned by both the demand and supply side last week. The demand side narrative continues to remain the major concern following the various types of curfews and social distancing measures due to the rapid acceleration of coronavirus cases across Europe. Traders will likely continue to monitor the weekly oil reports for fresh trading impetus. 

Gold

The precious metal continues to swing between losses and gains across last week. The pair held on to the key psychological level of $1,900 level. The main drivers for the precious metal remain the US stimulus tied with the election now and the movement of the US dollar.

Key Events Ahead

Monday

  • Imports, Exports, and Trade Balance (Australia)
  • Leading Economic Index (Japan)
  • IFO- Expectations, Business Climate and Current Assessment (Germany)
  • Chicago Fed National Activity Index and New Home Sales (US)
  • SNB’s Chairman Jordan Speech (Switzerland)

Tuesday

  • Imports, Exports, and Trade Balance (New Zealand)
  • RBA’s Bullock Speech (Australia)
  • ECB Bank Lending Survey (Eurozone)
  • Durable Goods, Nondefense Capital Goods, Housing Price Index, S&P Case Shiller Home Price and Consumer Confidence (US)

Wednesday

  • Total Filled jobs (New Zealand)
  • RBA Trimmed Mean CPI and Consumer Price Index (Australia)
  • ZEW Survey – Expectations (Switzerland)
  • BoC Rate Statement, Bank of Canada Monetary Policy Report
  • BoC Interest Rate Decision and Press Conference (Canada)

Thursday

  • Retail Trade, Large Retailers’ Sales, BoJ Monetary Policy Statement, Interest Rate Decision, Outlook Report and Press Conference (Japan)
  • NAB Business Confidence (Australia)
  • EU Leaders Summit, Consumer Confidence, Business Climate, ECB Interest Rate Decision, Deposit Rate Decision, Monetary Policy Statement and Press Conference (Eurozone)
  • Unemployment Rate, Change and Harmonized Index of Consumer Prices (Germany)
  • Fed’s Kaplan Speech, Core PCE, Jobless Claims, GDP Price Index, GDP and Pending Home Sales (US)

Friday

  • ANZ – Roy Morgan Consumer Confidence (New Zealand)
  • CPI, Industrial Production, Jobs/Applicants Ratio and Unemployment Rate (Japan)
  • Retail Sales, Gross Domestic Product and German Buba President Weidmann Speech (Germany)
  • Real Retail Sales and KOF Leading Indicator (Switzerland)
  • Consumer Price Index, Gross Domestic Product and Unemployment Rate (Eurozone)
  • Core PCE Expenditure, Personal Income, Personal Spending, Chicago Purchasing Managers’ and Michigan Consumer Sentiment (US)

By Deepta Bolaky
 @DeeptaGOMarkets

Tuesday, 27 October 2020 
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0 0 0.051 0 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0


Disclaimer:  The articles are from GO Markets analysts,  based on their independent analysis or personal experiences. Views or opinions or trading styles expressed are of their own;  should not be taken as either representative of or shared by GO Markets.  Advice (if any),  are of a ‘general’ nature and not based on your personal objectives, financial situation or needs.  You should therefore consider how appropriate the advice (if any) is to your objectives, financial situation and needs, before acting on the advice.  If the advice relates to acquiring a particular financial product, you should obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) for that product before making any decisions.

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