Companies’ balance sheets will give clues as to whether the artificial intelligence-driven rise will continue.
On the political agenda, the elections in Brazil, the four-day Fifth Plenum meeting of the Chinese Communist Party administration and the closely watched budget announcement in the UK will come to the fore.
1. CENTRAL BANKS MEETINGS
The Fed, the Bank of Canada and the Reserve Bank of New Zealand will announce their interest rate decisions next Wednesday, the ECB on Thursday and the BoJ on Friday.
A new interest rate increase is not expected this time from the Fed, ECB and BOJ, which increased interest rates last month.
Fed President Kevin Warsh’s evaluations on the course of interest rates will be closely monitored. While the ECB is expected to face questions regarding the risks that rapidly rising borrowing costs in France may pose, the BoJ may increase its inflation forecasts in the report it will publish after the meeting.
Markets expect the central banks of Canada and New Zealand to raise interest rates to reduce inflation. Central banks, on the other hand, evaluate how much high oil prices will increase inflation and how they will be reflected in the prices of other products and services.
2. BALANCE SHEET OF MAJOR TECHNOLOGY COMPANIES
As the third quarter balance sheet period continues in the USA, the balance sheets to be announced by the three major technology companies that contributed to the rise in the stock markets with their artificial intelligence investments will be closely watched.
While investors are worried about the risks that high expenditures on data centers may create, Alphabet, Microsoft and Amazon will announce their balance sheets.
While US companies are expected to significantly increase their profits in the third quarter, approximately one-third of the companies in the S&P 500 index will announce their balance sheets next week.
Other prominent companies that will disclose their balance sheets include pharmaceutical manufacturer Eli Lilly, oil giants Exxon and Chevron, and industrial equipment manufacturer Caterpillar.
3. BUDGET MEETINGS IN ENGLAND
British Chancellor of the Exchequer John Healey will try to ease the impact of rising energy prices on households in his first budget to be announced on Wednesday. In doing so, it will need to avoid increasing public debt and causing concern in bond markets.
To achieve this balance, Healey may have to accept a narrowing of the leeway given to him under fiscal rules. According to analysts surveyed by Reuters, it is possible to reduce this area by about half to 15 billion pounds ($20 billion) without worrying the markets.
Banks are expected to be most affected by tax increases. Shares in Britain’s biggest banks fell ahead of Healey’s budget announcement.
Decisions on spending items on issues such as defence, public services and social assistance may be postponed until next year. Healey hopes the Iran war and its pressure on public borrowing costs will ease by then.
4. ISRAEL ELECTIONS
The parliamentary elections in Israel to be held next Tuesday are expected to be one of the most important political turning points in the country’s recent history.
Polls show that current Prime Minister Benjamin Netanyahu’s Likud alliance and the opposition formed around former Chief of Staff Gadi Eisenkot are in a neck-and-neck race. The possibility that neither side will be able to gain a majority in the parliament indicates that talks to form a government may take longer.
The elections will be held at a time when Israeli markets are experiencing a strong rise. Since the attacks of October 7, 2023, the Tel Aviv stock exchange’s TA-125 index has risen by over 135 percent, while the Israeli shekel has gained 25 percent in value, becoming one of the best-performing currencies in the world.
Analysts state that Israel’s strength in technology has enabled it to benefit significantly from the global growth in artificial intelligence investments, and this impact will continue.
On the other hand, investors think that if Eisenkot and his allies win the election, tensions in the region may gradually decrease in the long run.
5TH CHINESE COMMUNIST PARTY MEETING
Senior leaders of the Chinese Communist Party will meet at a meeting that will start in Beijing at the beginning of next week and last for four days. The topic of the meeting will be “Advancing the Party’s comprehensive and strict supervision of its own management”.
Although the agenda of the meeting seems at first glance to be related only to the internal functioning of the party, the Chinese administration sees this step as a step taken to strengthen party discipline and ensure the implementation of the decisions taken at a time when external pressures are increasing. Increasing tensions with the United States and restrictions on China’s access to advanced foreign technologies also increase this pressure.
On the other hand, the Chinese economy also faces serious problems domestically. Despite the incentives to stimulate the economy, the long-term stagnation in domestic demand continues.
