Week ahead: Apple leads big tech earnings, UK Budget and Nonfarm Payrolls

Investors will be looking to the usual suspects to deliver the heavy lifting for equities. It’s a monster week for big tech earnings, with Apple, Amazon, Alphabet, Microsoft and Meta all due to report. With about one-fifth of the S&P 500 reported so far, the average 5% EPS beat so far is decent, whilst corporate sentiment has improved to a record high, and mentions of weak demand fell to 2-year lows. Elsewhere, all eyes are on the UK’s new chancellor, Rachel Reeves, and a possible far-reaching change to the UK’s fiscal outlook with the Budget set piece on Wednesday. US jobs data will also be watched closely, along with the advanced GDP reading for Q3 and core PCE inflation.

Here are the week’s key events:

Monday, October 28th: Japan Elections

Elections to Japan’s lower house will be a significant test for new prime minister Shigeru Ishiba, who called the snap poll to solidify his position at the ruling Liberal Democratic Party. With the result in doubt, it could result in some volatility in Japanese equities and the yen. Ishiba has taken a different tack from his predecessor, commenting explicitly on monetary policy. After a meeting with Bank of Japan governor Ueda, he sparked some aggressive yen selling after saying, "I do not believe that we are in an environment that would require us to raise interest rates further”.

Earnings: Ford (F)

Tuesday, October 29th: Alphabet Earnings

Trump favourites, McDonald’s, Pfizer, Visa and Snap, all report earnings, but the highlight is set to be Alphabet. Analysts expect a profit of $1.83 per share, up 18.1% from $1.55 per share reported in the year-ago quarter. In fiscal 2024, EPS is seen at $7.64, up 31.7% from $5.80 in fiscal 2023. 2025 EPS growth is seen at around 13%. Conference Board consumer confidence and JOLTS job openings provide some macro context for the day’s events.

Earnings: McDonald’s Corp (MCD), PayPal Holdings (PYPL), Pfizer (PFE), Alphabet (GOOGL), Advanced Micro Devices (AMD), Snap (SNAP), Visa (V)

Wednesday, October 30th: UK Budget, US tech earnings

It’s a monster day for US earnings, with Microsoft and Meta among the big tech names due to report. Investors also get updates from crypto plays Coinbase and MicroStrategy. On the economic data front, the Asian session features the latest Australian inflation data, which will offer clues for when and how the Reserve Bank will move next. German inflation numbers are due out and are likely to confirm the disinflationary trend. In the US, traders get a look at the advanced Q3 GDP reading alongside the ADP nonfarm employment report.

It’s Budget day in the UK – look for changes to borrowing and debt rules as the chancellor finds a way to invest for growth. Gilts and sterling will be closely watched but tax changes and other regulations will also impact UK equities.

Earnings: Caterpillar (CAT), Eli Lilly (LLY), Coinbase (COIN), Meta Platforms (META), Microsoft (MSFT), MicroStrategy (MSTR), Starbucks (SBUX)

Thursday, October 31st: Apple Earnings

The Bank of Japan’s two-day policy meeting wraps up just days after the snap election. The BoJ ended negative rates in March and hiked again in July. However, with inflation hovering around 2%, it is seen as in no hurry to raise rates quickly. However, traders will be on watch for changes to the price and growth outlook in its quarterly report, which could offer clues about where the BoJ is heading.

Meanwhile, look out for the Eurozone flash CPI inflation estimates, which are likely to confirm that the ECB is sticking to its easing bias. Core PCE inflation from the US will be closely watched alongside the latest unemployment claims and employment cost index.

Apple earnings are the big-ticket event for equity markets. EPS is forecast at $1.55 on revenues of $94.23bn. Analysts at Morgan Stanley were cautious ahead of the earnings report: "We expect Apple to post a strong Sept Q top- and bottom-line beat – led by late-cycle strength in the iPhone 15 – but guide Dec Q revenue ($125B, or 4.5% Y/Y growth) and EPS (of $2.36) 1-2% below Street forecasts, which conservatively embed a lower iPhone build outlook.” Nevertheless, despite the near-term setup being “more challenging”, it stuck to its long-term thesis of Apple as a ‘top pick’.

Earnings: Mastercard (MA), Merck & Co (MRK), Uber (UBER), Amazon (AMZN), Apple (AAPL), Intel Corp (INTC)

Friday, November 1st: Nonfarm Payrolls

Strength in the US labour has pushed markets into expecting a slower pace of easing by the Fed. Does the thesis hold ahead of the election? Nonfarm payrolls grew by 254k in September, well ahead of the 150k expected, whilst there were also upward revisions to July and August. Wages firmed up to 4.0% from 3.9% annual growth. However, the market reaction seems mainly to be about the jobless rate. Unemployment fell to 4.1% - it was the triggering in August of the so-called Sahm Rule - when unemployment increases half a percentage point from the previous 12-month low, a reliable recession indicator – which triggered the big selloff in equities.

Earnings: Chevron (CVX), Exxon Mobil (XOM)

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