It is crunch time for the UK and EU as both sides of the Brexit divide try and hash out a deal in Brussels.
UK: Brexit crunch time
At one point it seemed that the chances of deal this week were dead in the water – or more specifically, the Irish Sea. And then Boris Johnson and Irish Taoiseach Leo Varadkar came out the other side of their private meeting last Thursday stating they could ‘see a pathway’ to a possible agreement, to the joy of the pound and the scepticism of some EU officials.
Well, by Friday we will have an idea of how walkable that pathway is, as the UK and EU engage in one last throw of the dice before the October 31st deadline (that is, unless, Johnson does indeed ask for an extension like he is legally required to do if a deal isn’t reached by Saturday).
Though it’s going to be a nervy week for the pound, there is plenty for it to get through before the summit. With wage growth last month hitting 4.0%, investors will be curious to see if it can remain at that level on Tuesday, a day that also has an appearance from Mark Carney. Wednesday then sees the latest inflation reading (and another speech from the BoE chief), while Thursday has September’s retail sales.
UK: Stocks to watch
There’s also a fairly busy corporate calendar, including Bellway and Hays – which will be worried after last week’s PageGroup numbers – on Tuesday; ASOS and Barrett Developments on Wednesday; WH Smith, Domino’s Pizza and Unilever on Thursday; and a post-HKEX bid statement from the London Stock Exchange.
US: The aftermath of US-China trade talks
Dealing with the aftermath of the US-China trade talks in Washington, things could get off to a slow start because of Columbus Day on Monday. Tuesday has the Empire State manufacturing index, followed by retail sales on Wednesday and the Philly Fed manufacturing index and industrial production numbers on Thursday.
The biggest data actually comes on Friday – but not from the US. China releases its GDP, fixed asset investment and industrial production figures at the end of the week, following month after month of very worrying readings.
US: Stocks to watch
As for the earnings calendar, it’s a finance-focused week. BlackRock, Citigroup, Goldman Sachs, JP Morgan and Wells Fargo all report on Tuesday, with Bank of America, IBM and Netflix on Wednesday, Morgan Stanley on Thursday, and Coca-Cola and eBay on Friday.
Eurozone: Trade wars and Brexit
The Eurozone will be susceptible to the trade war and, to a lesser extent, the Brexit news this week, while also having its own stuff to deal with. The region-wide industrial production reading arrives on Monday, the ZEW economic sentiment numbers on Tuesday and the inflation and trade balance figures on Wednesday.
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