The mood music remains pretty much the same  - the standoff between Catalonia and Madrid continues while we have no real progress on Brexit.

Trump’s tax reforms have moved forward but a lot work still needs to be done to get a bill over the line.

Spotlight this week is first on Asia with the snap election in Japan an important test for the economic reforms of Shinzo Abe, while the European Central Bank (ECB) is in action on Thursday.

Japan elections


The prime minister calls a snap election because the government has healthy lead in the polls over a floundering opposition – sound familiar? Japan’s Shinzo Abe gambled on calling Sunday’s snap poll but unlike Theresa May, looks set to win an easy victory and cement his power.

At stake is the future of Abenomics and the ultra-loose monetary policy pursued by the Bank of Japan as one of the three ‘arrows ‘of the doctrine. But after years of expansionary policy, sustained inflation has yet to materialise. A victory for Abe means keeping monetary policy looser for longer and kicking the can down the road for a few more years.

Voting takes place on Sunday, October 22nd with polls closing at 20:00 local time. TV networks will release exit polls immediately after.



The saga continues. Will this week’s meeting finally see an announcement on a taper of asset purchases or will policymakers get cold feet?

At the last meeting in September, Mario Draghi said the “bulk” of any decision on tapering would be discussed when the Governing Council convenes this week.

Complicated by the rules on which bonds it can buy and the strength of the euro, it is believed the ECB will seek to taper more slowly than markets had previously expected. It is now anticipated that the bank will shrink the €60bn monthly asset purchase to a little as €20bn per month, but remain in the market for a lot longer, perhaps to the end of 2018. Such a move could help keep delay any interest rate hike chatter and keep on a lid on the euro’s recent strength.

GDP prints


The main macro data comes from the UK and US Q3 GDP initial readings. US numbers will come with the usual hurricane health warnings but nevertheless growth is expected to run at around 2.5%. Whilst short of the Trump administration’s target it should still be enough to warrant gradual tightening by the Federal Reserve.

In the UK, the picture is clouded by Brexit uncertainty which appears to have dimmed economic growth in the first half of the year. For Q3, PMI surveys put the economy on course for another 0.3% expansion. The big question as far as sterling goes is whether this would be enough to justify the Bank of England raising rates in November. If it misses this estimate expectations for an imminent rate hike would fall considerably and might take the pound with them.

Earnings – Tech Thursday


Earnings season continues on Wall Street with more from the Dow 30 components. Boeing, Coca-Cola, 3M, McDonald’s, Visa and United Technologies are among the big-hitters releasing Q3 earnings updates. On Friday it’s the energy special with Chevron and Exxon Mobil reporting.

But it’s Thursday that arguably holds the most interest right now as tech giants, both young and old, report earnings that could help shape the direction of the major US indices, particularly the Nasdaq. Amazon, Alphabet, Microsoft, Intel and Twitter will report earnings on Thursday, October 26th.

In the UK there are Q3 trading updates from UK-focused banks Lloyds, Barclays and RBS, as well as some production updates from miners to watch for.

Economic Calendar

(All times BST)

Sunday, 22 October

All day – Japan elections

Monday, 23 October

13:30 – Canada wholesale sales

15:00 – Eurozone consumer confidence

Tentative – US Treasury currency report

Tuesday, 24 October

01:30 – Japan flash manufacturing PMI

08:00 – French flash manufacturing & services PMIs

08:30 – German flash manufacturing & services PMIs

09:00 – Eurozone flash manufacturing & services PMIs

Wednesday, 25 October

01:30 – Australia CPI inflation q/q, trimmed mean CPI q/q

09:00 – German Ifo business climate

09:30 – UK preliminary Q3 GDP

Tentative – UK inflation report hearings

13:30 – US core durable goods orders

15:00 – Bank of Canada monetary policy report, rate statement, overnight rate

15:00 – US new home sales

15:30 – US weekly crude oil inventories

16:15 – Bank of Canada press conference

22:45 – New Zealand trade balance

Thursday, 26 October

07:00 – German GfK consumer climate

07:00 – UK Nationwide house price index

08:00 – Spain unemployment rate

09:00 – Eurozone M3 money supply

12:45 – ECB interest rate decision

13:30 – ECB press conference

13:30 – US weekly unemployment claims

15:00 – US pending home sales

Friday, 27 October

00:30 – Japan national core CPI, Tokyo core CPI

13:30 – US advanced Q3 GDP

15:00 – US revised UoM consumer sentiment

Corporate Calendar


Monday, 23 October

Halliburton (HAL) – Q3/2017, EPS estimate 0.373

Hasbro (HAS) – Q3/2017, EPS estimate 1.962

Kimberly-Clark Corp (KMB) – Q3/2017, EPS estimate 1.542

Petra Diamonds (PDL) – Q1/2018

Tuesday, 24 October

3M Co (MMM) – Q3/2017, EPS estimate 2.205

AT&T (T) – Q3/2017, EPS estimate 0.750

Caterpillar (CAT) – Q3/2017, EPS estimate 1.233

General Motors (GM) – Q3/2017, EPS estimate 1.130

Lockheed Martin Corp (LMT) – Q3/2017, EPS estimate 3.261

McDonald’s (MCD) – Q3/2017, EPS estimate 1.759

United Technologies (UTX) – Q3/2017, EPS estimate 1.689

St James Place (STJ - Q3/2017 trading update

Anglo American (AAL) – Q3/2017 production report

Bunzl (BNZL) – Q3/2017 trading update

Wednesday, 25 October

Boeing Co (BA) – Q3/2017, EPS estimate 2.704

Coca-Cola Co (KO) – Q3/2017, EPS estimate 0.489

Equifax Inc (EFX) – Q3/2017, EPS estimate 1.492

Visa Inc (V) – Q4/2017, EPS estimate 0.848

Antofagasta (ANTO) – Q3/2017 trading update

GlaxoSmithKline (GSK) – Q3/2017 trading update

Lloyds Banking Group (LLOY) – Q3 interim management statement

Thursday, 26 October

Alphabet (GOOGL) – Q3/2017, EPS estimate 8.323 (AMZN) – Q3/2017, EPS estimate 0.042

Intel Corp (INTC) – Q3/2017, EPS estimate 0.803

Microsoft (MSFT) – Q1/2018, EPS estimate 0.723

Raytheon (RTN) – Q3/2017, EPS estimate 1.904

Twitter (TWTR) – Q3/2017, EPS estimate 0.064

Xerox (XRX) – Q3/2017, EPS estimate 0.826

Barclays (BARC) – Q3/2017 results

Connect Group (CNCT) – full-year results

Debenhams (DEB) – full-year results

Friday, 27 October

Chevron Corp (CVX) – Q3/2017, EPS estimate 0.988

Exxon Mobil (XOM) – Q3/2017, EPS estimate 0.846

RBS (RBS) – Q3/2017 results

Source: Bloomberg