As investors head into the week, markets will be shaped by several crucial developments, including U.S. inflation data for September, the Federal Reserve’s minutes from its September meeting, the kickoff of the third-quarter earnings season, and continued volatility in oil prices driven by Middle East tensions.

U.S. Inflation Data (CPI)

  • When: Thursday
  • What to Expect: The U.S. Consumer Price Index (CPI) for September is expected to show a continued moderation in price pressures, which will help shape expectations for future Fed rate cuts. Last Friday’s stronger-than-expected jobs report already signalled a robust labour market, reducing the likelihood of aggressive cuts.
  • Market Impact: A hotter-than-expected inflation number could push the Fed to hold off on a November rate cut. Analysts at UBS have noted that if inflation rises faster than anticipated, the Fed might skip any cuts next month.

Federal Reserve Minutes

  • When: Wednesday
  • What to Expect: Investors will look for more details on the rationale behind the Fed’s 50 basis point cut in September. Additional insights into how policymakers are thinking about the pace of future cuts will be critical for market direction.
  • Speakers: Several Fed officials, including Neel Kashkari, Raphael Bostic, and Lorie Logan, are also scheduled to speak throughout the week, providing further clues on monetary policy.

Earnings Season

  • When: Friday (main reports)
  • Key Reports: Major financial institutions like JPMorgan Chase, Wells Fargo, and BlackRock will report third-quarter earnings. Their results will offer insights into the U.S. economy, including loan demand and the impact of the recent Fed rate cut.
  • Outlook: Investors will also be watching results from PepsiCo and Delta Air Lines to gauge consumer sentiment. Despite recent volatility, the S&P 500 is up 20% this year, and analysts are hoping that strong earnings will justify these high valuations.

Oil Prices

  • Current Situation: Oil prices surged last week due to the rising risk of a broader conflict in the Middle East. Israel’s threats to strike Iran after missile attacks have put the region on edge. However, President Joe Biden has cautioned Israel against targeting Iranian oil facilities, which could temper price gains.
  • Market Impact: Last week, Brent crude gained over 8%, while WTI saw a 9.1% weekly increase. With Iran producing around 3.2 million barrels per day, any supply disruption could drive oil prices above $100 per barrel.

Other Global Events

  • RBNZ Meeting: The Reserve Bank of New Zealand meets on Wednesday, and market watchers are speculating that it may follow the Fed’s lead with another rate cut.
  • RBA Minutes: The Reserve Bank of Australia will release minutes from its September meeting on Tuesday, with insights into its hawkish stance expected.

This week, investors should stay alert to economic data, earnings reports, and the ongoing geopolitical risks that could drive market volatility.