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Week Ahead: high stakes for Obama and global investors

Our preview of the main financial events of the coming week.

 
Week Ahead: high stakes for Obama and global investors

A string of major corporate earnings reports will provide market direction next week, before US president Barack Obama is dealt the last major economic scorecard before he faces Mitt Romney in the 6 November election.

The reading of non-farm payrolls, just four days before the election, could make it even more difficult to pick a clear winner between the currently closely tied rivals in an election that is largely being fought over the state of the economy. Too tight a result and the winner’s chances of finding a quick solution to the fiscal cliff – when spending cuts come into force and taxes rise – will be slim.

Economists are looking for jobs growth of around 140,000 in October, but they warn that the unemployment figure could also tick higher.

The report will cap a week of US economic releases that also includes the consumer confidence report on Tuesday and the ISM manufacturing survey two days later. All of these numbers will keep markets guessing. 

Looking for corporate strength

Markets will also be directed by more third-quarter earnings reports in both the US and Europe. Investors will be hoping there isn’t a repeat of the past week, when disappointing numbers from companies including Amazon and Apple weighed on global share prices.

The UK corporate calendar is dense (see below), with banks and energy companies among the blue chips preparing to provide updates to the market.

Spain, Greece and Britain

There will also be more evidence on the UK’s economic progress after Thursday’s report showing the country’s surprisingly strong recovery from the depths of a double-dip recession. Construction and manufacturing PMI surveys are expected to provide a reminder of the difficulties still faced by the economy, which has essentially flatlined this year.

In the troubled eurozone – which, unlike the UK or US, is showing few signs of recovery – Spain and Greece still jostle for attention. A reading of Spanish third-quarter GDP on Tuesday isn’t expected to show any improvement from the 0.4% contraction in the previous three months, providing little reason to change expectations that prime minister Mariano Rajoy will soon have to seek a bailout.

And in Greece, according to news reports, a conference call has been scheduled for Wednesday for eurozone finance ministers to review the country’s progress towards meeting targets to allow it access to the next tranche of its aid package.

Divided fortunes in Asia

In Asia, the Japanese central bank is expected to announce more monetary stimulus, expanding its asset purchase plan. That would mark the second extension of the scheme in as many months amid a slowdown in exports and continued damaging yen strength.

There will also be news from Japan’s now economically larger trading partner, China, where HSBC’s flash manufacturing PMI report will be published on Thursday. The survey could rise above 50, signalling expansion and feeding hopes that China’s economy has troughed after recent official numbers showed GDP growth of 7.4% for the third quarter and improvements in consumer spending and industrial production.

The week is concluded with a meeting of G20 finance ministers and central bank heads in Mexico at the weekend.

FTSE calendar

Among the major UK-listed companies reporting numbers this week, BP (BP.L), Imperial Tobacco (IMT.L) and Standard Chartered (STAN.L) will be in focus on Tuesday.

On Wednesday, GlaxoSmithKline (GSK.L), Standard Life (SL.L), Barclays (BARC.L), Next (NXT.L) and Bumi (BUMIP.L) are among the top companies updating investors.

Thursday is particularly busy, with reports from BT (BT.L), Shell (RDSb.L), Reed (REL.L), Direct Line (DLGD.L), Smith & Nephew (SN.L), BSKYB (BSY.L) (which holds its AGM on the same day, where some investors are hoping to oust James Murdoch), BG Group (BG.L), Legal & General (LGEN.L) and Lloyds (LLOY.L).

Royal Bank of Scotland (RBS.L) and Admiral (ADML.L) both provide trading statements on Friday.

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