Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Top 5 Things to Watch in Markets in the Week Ahead

Published 11/09/2022, 10:34 pm
Updated 11/09/2022, 10:34 pm
© Reuters.

© Reuters.

By Daniel Shvartsman

Investing.com - Markets started September on a strong note, with the S&P 500 closing up 3.4% in the first full week of the month and the NASDAQ Composite jumping 4.1%, while the Dow Jones Industrial Average climbed only 2.4%. Whether that was just a market positioning adjustment or the sign of anything more sustained will be on watch this week, especially as a new set of inflation reports comes out. Corporate news is on the lighter side, though some big earnings reports and a rare major IPO are on the docket for the week ahead. This weekend served as a reminder of the ongoing and changing nature of the Russia-Ukraine war, and while the recent developments may not have a direct market impact, the repercussions could certainly reverberate through the financial world.

Here's what you need to know for the week ahead in financial markets:

1. CPI and PPI Reports

A bevy of consumer price index (CPI) reports for August come out this week. India releases its CPI report on Monday, Germany, Spain, and the U.S. all release on Tuesday, the U.K. releases its report on Wednesday, France releases its report on Thursday, and Italy and the Eurozone as a whole release theirs on Friday.

Producer Price Index (PPI) reports are also due out from Japan, Switzerland (Tuesday), the U.K. (Wednesday), and the U.S.

The expectations are for inflation to be easing in the U.S., with month over month Core CPI expected at 0.3%, matching last month’s number; this would mark the lowest back-to-back readings since last fall. Headline CPI is expected to be -0.1%, as dropping gas prices continue to take pressure off inflation. Core PPI is expected to be 0.3%, a rise from last month’s 0.2%, while the headline PPI number is also expected to be -0.1%.

Those expectations are quite different in Europe; the U.K. is forecast to see core CPI month over month growth of 0.8%, a significant jump, while headline CPI is expected to jump another 0.6%. The Eurozone is forecast to see a 0.5% rise in the core CPI number, a jump from last month’s revised figure of 0.1%. The same is expected of headline CPI, as energy prices still loom large with the seasons changing.

The ECB has already made its latest move, hiking interest rates by 75 basis points last week. The Fed is expected to stick to at least a 50 basis points hike if not 75, and the inflation reports are not expected to shake it, but no doubt Chair Jerome Powell would welcome signs that inflation is at least moderating meaningfully.

The Bank of England, whose meeting was due this week but postponed in the wake of Queen Elizabeth II’s death, faces a more fluctuating environment with new Prime Minister Liz Truss in charge and already having issued a major energy plan. Its effect on the market is among the things the BOE will have to weigh; it will also get an employment report as an additional piece of data to throw into the mix.

2. Pair of Key Earnings Reports

While Q2 earnings season has just about played itself out, there are two key software companies reporting results that are worth watching.

Software giant Oracle (NYSE:ORCL) reports Monday after the close, and is expected to show 4% earnings growth in its first quarter including newest acquisition Cerner (NASDAQ:CERN). Oracle received a recent price target upgrade from a Global Equities analyst in light of the Cerner deal, as well as a buy rating from Guggenheim, but like many in the software and tech industry, has been adjusting to a more difficult macro environment, as the company has been reported to have started lay-offs. So the earnings report and conference call may be revealing.

Adobe Systems (NASDAQ:ADBE) reports Thursday after the market close. The company is expected to post 7.3% earnings growth and 12.6% revenue growth. A Jefferies analyst warned that the company hasn’t adjusted guidance for macro headwinds, only forex effects, so there could be more room to disappoint. The company disappointed in its prior report but the share price has since more than recovered. Adobe’s role as one of the original software companies that transitioned successfully to a SaaS (software as a service) model makes its report a useful bellwether.

3. Corebridge Financial IPO

2022’s volatile trading has left the IPO market as a casualty, with most IPOs that have made it to market being of the thinly traded, relatively obscure type. Corebridge Financial is a spin-off from AIG (NYSE:AIG) but will come to market via an IPO rather than a direct issuing to AIG shareholders. It focuses on retirement solutions and insurance plans. The company is due to start trading on Thursday, and seeks to raise $1.68-$1.92B before factoring in fees or underwriter share purchases, vs. a valuation range of $13.6-$15.6B.

Read more about the IPO here: 7 Things to Know About the Corebridge Financial IPO

4. Big Investment Conferences and Starbucks' Investors Day

With the summer over and earnings season in its quietest moments, many companies are hitting the road to meet with investors. Investor conferences and presentations often feature strategic updates and announcements, shifts in sell-side analyst and market thinking, and even dealmaking.

A few notable conferences or analyst days this week:

Goldman Sachs Communicopia + Technology Conference, featuring companies such as: MongoDB (NASDAQ:MDB), Warner Bros Discovery (NASDAQ:WBD), Dynatrace (NYSE:DT), Dell Technologies Inc (NYSE:DELL), Airbnb Inc (NASDAQ:ABNB), Snowflake Inc (NYSE:SNOW), ServiceNow (NYSE:NOW), T-Mobile US Inc (NASDAQ:TMUS), Pinterest (NYSE:PINS), and Visa (NYSE:V)

Morgan Stanley 20th Annual Global Healthcare Conference, featuring companies like Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE), Quidel (NASDAQ:QDEL), Merck & Company Inc (NYSE:MRK), Bausch + Lomb Corp (NYSE:BLCO), AbbVie Inc (NYSE:ABBV), Eli Lilly (NYSE:LLY), Insulet (NASDAQ:PODD), and Quest Diagnostics (NYSE:DGX).

Barclays) Global Financial Services Conference, featuring Cboe Global Markets Inc (NYSE:CBOE), US Bancorp (NYSE:USB), Huntington Bancshares (NASDAQ:HBAN), American Express (NYSE:AXP), JPMorgan (NYSE:JPM), Allstate (NYSE:ALL), and Robinhood (NASDAQ:HOOD), among other companies.

On the analyst days front, Workday (NASDAQ:WDAY), Workiva (NYSE:WK), Corteva (NYSE:CTVA), and Starbucks (NASDAQ:SBUX) all have investor or analyst days on Tuesday, with Starbucks especially in close watch given the appointment of its new CEO recently.

5. Russia-Ukraine Developments and Aftershocks

Ukraine’s surprising recapture of the city of Izium in the country’s northeast has caught observers' attention around the world as a potential turning point in the war. Ukraine is also attacking Russian positions in the south of the country, near Kherson, and should they be able to maintain an attack on two fronts and take and hold territory, it would mark a different tone.

Russia has continued to escalate economic pressure on Europe with the shutting down of the Nord Stream 1 gas pipeline. While the military landscape is shifting and uncertain, it is not hard to imagine that Russian setbacks could only increase Russia’s willingness to use its economic leverage with Ukraine and with Ukraine’s supporters in predictable and unpredictable ways, which could put more pressure on European countries to resolve their energy situation before the winter arrives, and which makes the inflation reports mentioned at the top of the article all the more relevant.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.