This week was marked by another sharp rise in oil prices, whilst the US stock market began to price in the first corporate results to be released. US CPI inflation came in higher than expected, but the market began to worry about the geopolitical situation, and yields fell amid risk aversion. As the new week begins, we can expect, first and foremost, the start of earnings reports from technology companies. However, we will also see inflation figures from the UK, which could have a significant impact on the outlook for interest rates. Given all the turmoil surrounding oil, the market will also be keeping a close eye on data on US oil inventories. With this in mind, next week it is worth paying attention to markets such as GBPUSD, US100 (Nasdaq 100 futures) and Oil (Brent crude).
GBPUSD
From Monday, the pound sterling will face a week packed with key data from the UK. On Tuesday, we will see the unemployment rate, where a rebound is expected. Then, on Wednesday, comes the highlight of the week: the CPI consumer price index for September. The market consensus expects an acceleration to 3.4% y/y from 3.1% y/y, which is well above the Bank of England’s 2% inflation target. This combination – rising unemployment coupled with accelerating inflation – puts the central bank in a difficult position, as a rate rise could curb price growth but would exacerbate the slowdown in the labour market. If the reading comes in higher than forecast, the pound may strengthen, particularly should the US dollar show signs of slight weakness.
US100 (Nasdaq 100 futures)
Next week marks one of the most important moments of the earnings season for the Nasdaq index and also for the US100 futures contract. On Tuesday, Netflix will report its results, and on Wednesday, two companies from the so-called ‘Magnificent Seven’ – Meta Platforms and Tesla – will do the same. The market expects Tesla to report earnings per share of around US$0.43 and Meta to report around US$6.79, but for these companies, it will be the management’s comments on further investment spending related to artificial intelligence – rather than the financial figures themselves – that will be key. Last week marked the first week of declines following four weeks of gains, so investors will be looking for strong results from tech companies. Strong results and optimistic forecasts from companies could quickly reverse this sentiment and drive the index higher, whilst disappointment – particularly regarding the costs of artificial intelligence development – could deepen the recent sell-off.
OIL (Oil Brent)
Crude oil took centre stage this week, rising significantly in value despite Trump’s efforts to drive down fuel prices. On Wednesday, we will see the weekly US crude oil stock figures published by the US Department of Energy (the previous reading showed a fall in stocks of around 8.6 million barrels), which may confirm or dampen the current upward momentum. If stocks fall significantly again, this could reinforce the market’s belief in a tight supply situation and push prices even higher. On the other hand, following such a sharp rise, some investors may begin to take profits, which would naturally limit further gains. Nevertheless, any news regarding the situation in the Middle East will have the greatest impact on the commodity’s future price movements.
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