Hike rates

Weekly Outlook: ECB set to hike rates as UK appoints third Prime Minister in 2022

monday october 24

  • – Commercial statement of Pearson
  • – Flash Manufacturing Purchasing Managers Indices for Asia, Europe and the UK
  • – In Europe, the quarterly results of Phillips

tuesday october 25

  • – Half-year results of Whitbread
  • – Third quarter results of HSBC
  • – Commercial statements of Shoe area and Hunt
  • – Japanese inflation
  • – Belgian Economic Survey Synthetic Curve
  • – US Case-Shiller House Price Index
  • – US Conference Board Consumer Confidence Survey
  • – In Europe, the quarterly results of Novartis, SAP, UBS, Randstad, SKF and SSAB
  • – In the United States, the quarterly results of Alphabet, Visa, Coca-Cola, Texas Instruments, UPS, Lockheed Martin, General Electric, 3M, General Motors, Twitter, Kimberly-Clark, Halliburton, Spotify, Teradyne and Mattel

Wednesday October 26

  • – Half-year results of Bloomsbury Edition
  • – Commercial statements of WPP, Standard Chartered and Elementis
  • – Ifo survey on German economic sentiment
  • – Strategic decision of the Bank of Canada
  • – Sales of new homes in the United States
  • – US Oil Inventories
  • – In Asia, the quarterly results of CMU
  • – In Europe, the quarterly results of Iberdrola, Daimler, Heineken, Banco Santander, BASF, Universal Music and UniCredit
  • – In the United States, the quarterly results of Microsoft, Metaplatforms, Boeing, Ford, Kraft-Heinz, United Rentals and Wolfspeed

Thursday October 27

  • – Third quarter results of Shell, Lloyd’s and Unilever
  • – Commercial statements of Anglo-American, Aveva, Renishaw and Foxtons
  • – US GDP growth in the third quarter
  • – US Durable Goods Orders
  • – Weekly US Unemployment Claims
  • – In Asia, the quarterly results of Samsung Electronics, SK Hynix and Baidu
  • – In Europe, the quarterly results of TotalEnergies, AB-InBev, Kone, Carlsberg, Repsol, Volvo Cars and Swiss credit
  • – In the United States, the quarterly results of Amazon, McDonald’s, Comcast, Honeywell, Intel, Altria, Newmont Mining and South West Airlines
  • – European Central Bank (ECB) Interest Rate Decision

The ECB will announce its latest strategy on Thursday. Unlike the Bank of England and the Fed, the ECB has only raised interest rates twice so far this year – a 50bp hike in July, followed by a 75bp hike. basis points in September to leave European rates at 1.25%. However, markets are expecting a 2% hike on Thursday, which would take rates to their highest level since February 2009.

AJ Bell financial analyst Danni Hewson said: “[A 75bps increase] This would mean that interest rates are still extremely negative in real terms, after inflation, since inflation is 9.1% on average in the EU – France had the lowest rate at 6.6% and Estonia the highest at 25.2%. The ECB therefore still has some work to do if it wants to bring inflation back to the mandated level of 2%, and so economists and investors will be looking for more details on the bank’s quantitative tightening proposals.

“The guard [ECB president] and his colleagues have, so far, rather dodged this question by talking about an anti-fragmentation mechanism to help the most indebted countries of the South if bond yields start to rise once the ECB begins to reduce its balance sheet. and to sell some of the 7 billion euros bonds it has acquired since the start of quantitative easing in the wake of the financial crisis in 2009.

“This discussion has yet to really convince anyone and – as the Bank of England and the US Federal Reserve are finding out – turning QE into QT is not easy, at least without causing upheaval somewhere.”

Apple will release its fourth quarter results on Thursday. These results could provide insight into how the cost of living crisis is affecting consumer behavior. Derren Nathan, head of equity research at Hargreaves Lansdown, said: “In the third quarter, sales of Apple’s innovative gadgets were down slightly. Hardware sales account for around three-quarters of total revenue, so this was a disappointing development. Investors are hoping the recent launch of the fourteenth generation iPhone has fueled the momentum, but it’s not expected to have moved the dial too much yet due to the timing of the release.

“What will be more prudent to watch will be the outlook statement and whether customers hold back on buying new models amid rising inflation. The latest iPhones start at £1,099 in the UK Uni, but there are earlier models priced as low as £499, so it will be interesting to see if there’s any evidence of lower prices.

“There will be a watch on whether there is continued momentum in Apple’s service offering, which has shown stronger growth of late. But investors should remember that Apple’s world is a close-knit ecosystem and that if hardware sales growth doesn’t return, it will also impact Apple’s ability to sell services.

“Apple’s cash generation is impressive, with analysts expecting free cash flow of $111.6 billion for the just-ended fiscal year. There is room to increase payouts to shareholders and so eyes will be on any news about the dividend and buyouts next week.

friday october 28

  • – NatWest third quarter results
  • – Commercial statements of glencore and Computer center
  • – The British Conservative Party will elect leader and successor to Prime Minister Liz Truss

Candidates have walked out of the starting gate as the race to become the next Tory leader and UK Prime Minister begins. They need a minimum of 100 votes from their fellow MPs to pass the first stage. With 357 MPs in office, this means that only three people can be real candidates.

The favorites are currently thought to be former Prime Minister Boris Johnson, whose premiership died of a thousand cuts; Rishi Sunak, who lost to Truss in the previous leadership contest; and Penny Mordaunt, who narrowly missed the cut to enter the bottom two last time out.

Chancellor Jeremy Hunt has already ruled himself out of the race, a sensible move given his success in steadying the ship following the disastrous mini-budget, it’s likely his services will be retained once the new leader is chosen. But, as always in British politics, no one should count their chickens before they hatch.

  • – UK Mortgage Approvals
  • – Money supply growth in the UK
  • – Pending home sales in the United States
  • – In Asia, the quarterly results of ICCB and Budweiser Asia-Pacific
  • – In Europe, the quarterly results of Sanofi, volkswagen, ENI, BBVA, Holcim and Swedish game
  • – In the United States, the quarterly results of ExxonMobil, Chevron, Colgate-Palmolive and Royal Caribbean Cruises
  • – Bank of Japan (BoJ) interest rate decision

The BoJ is expected to release its latest interest rate decision on Friday. Unlike most other major economies, the bank continued its dovish stance and left its interest rate unchanged at -0.1%, despite inflation hitting an eight-year high of 3% in September.

Hewson said:[The BoJ] is expected to leave its headline interest rate unchanged at -0.1%, stick to its qualitative and quantitative easing policy of buying assets up to 80,000,000,000 JPY per year, or 475 billion pounds sterling per year, and cap the yield on 10-year Japanese government bonds at 0.25%.

“The BoJ barely manages to defend this 0.25% cap, fair, and no changes are expected until Governor Haruhiko Kuroda steps down at the end of his second term in April 2023. At the very least , the BoJ’s balance sheet is starting to shrink, so the winds of change may be blowing here too.