America dominates global affairs and news this week thanks to the elections on Tuesday, followed by the continuing surge in COVID-19 cases, not to mention the second last meeting of the year for the US Federal Reserve.
The election result and its aftermath overshadows all markets, especially in the US where there are fears the result could be too close for comfort and if Joe Biden wins narrowly, Donald Trump will not accept the result.
But more than 90 million people have already voted (and more in Texas than voted in 2016) and that will complicate the assessment of the election result.
There’s also some important data and the US earnings season winds down this week as well as the October jobless numbers at the end of the week.
The Fed meeting outcome on Wednesday will be overshadowed (not unexpectedly) by the election and its outcome.
For that reason no action is expected in terms of policy changes, so the data flow in the coming week will likely take prominence – especially the October jobs report on Friday.
More and more investors and analysts think the technology and communications stocks that drove a massive rebound in US markets this year will face a tougher slog in coming months, no matter whether Republican President Donald Trump or Democratic challenger Joe Biden wins Tuesday’s election.
Friday saw evidence for that with Facebook, Apple, Amazon and Twitter all suffered big losses of between 5% and 21%.
Just over 100,000 COVID-19 infections were reported on Friday – a record – up from 91,000 on Thursday. India reported more than 48,000 new cases as a second wave appears in that country – hundreds of thousands of new cases were reported across Europe and the UK.
The Fed meets Thursday and is likely to stress the uncertain economic outlook with coronavirus cases on the rise again, highlight the need for more fiscal stimulus and may announce more definitive guidance regarding its quantitative easing program, according to the AMP’s Chief Economist, Dr Shane Oliver.
On the data front regional manufacturing conditions indexes point to a solid October manufacturing conditions survey reading of around 55.6 (Tuesday), the services survey (Thursday) is also likely to remain solid.
Dr. Oliver says Friday’s jobs data is expected to show a 635,000 gain in payrolls with unemployment of 7.7%, down from 7.9% in September.
But with jobs growth clearly slowing, some economists say there is a chance the jobless numbers could surprise on the downside.
September quarter earnings reports will also continue to flow with just over 40% of the S&P 500 stil to report.
Media stocks will be the major reporters – Fox Corp, News Corp, the New York Times, AMC Networks,Echostar, Meredith, Gannett.
Others reporting include Paypal, Softbank, Qualcomm, Gannett, Alibaba, Volkswagen, Toyota, Bayer, AstraZeneca, Bayer, Adecco, Modelez, Ryanair, McKesson, Dean Foods, Tenneco, Loews Corp,
The third-quarter earnings season is almost past its halfway mark, with about 86.2% of S&P 500 companies topping earnings estimates, according to Refinitiv data.
Overall, profit is expected to fall 10.3% from a year earlier. That’s half the original estimates for a fall of just over 21%.
