US equity investors are gearing up for a significant week filled with quarterly earnings reports, following a positive start last Friday from large-cap banks. This optimism is balanced by a cautious eye on the escalating crisis in the Middle East and ongoing statements from Federal Reserve officials regarding future policy directions. Quarterly earnings anticipated this week include major financial institutions such as Bank of America, Goldman Sachs, Citigroup, Morgan Stanley, ASML Holdings, Taiwan Semiconductor Manufacturing Company, and American Express.
The results from these companies will likely influence market sentiments, as investors weigh their outlooks against the current geopolitical backdrop. In a significant move, the US is dispatching an advanced anti-missile system to Israel, along with US troops to assist in its operations. This deployment comes in response to Iran’s unprecedented attacks against Israel on April 13 and again on October 1.
Reports indicate that Iran has warned the US about potential retaliation against any further Israeli attacks, showcasing the heightened tensions in the region. This week will also feature prominent Federal Reserve officials on the speaking circuit. Notable figures include Minneapolis Fed President Neel Kashkari, Fed Governor Christopher Waller, San Francisco Fed President Mary Daly, and Chicago Fed President Austan Goolsbee.
Their speeches may provide crucial insights into the Fed's outlook and potential future policy changes. Key economic indicators slated for release this week include retail sales and industrial production figures for September, as well as weekly initial jobless claims. Early assessments from Scotiabank suggest that retail sales are likely to report a solid gain, while initial jobless claims may see an uptick due to the recent hurricane impacts. Additionally, over the weekend, China unveiled strategies aimed at addressing its housing slump.
Finance Minister Lan Fo'an indicated that the Chinese government would offer support to local governments managing their debts and would purchase unsold properties. However, details regarding the size of this support package or any new measures designed to stimulate consumption have yet to be disclosed.
This lack of specificity could potentially dampen investor confidence in Chinese stocks, including those traded in the US, especially as there have been recent gains linked to expectations of increased fiscal stimulus from the Chinese government..