This week, the focus among investors will be on corporate earnings. This is after about 15% of companies in the S&P 500 released their earnings last week. Of all the companies that released their earnings, more than 80% beat the consensus analysts’ forecasts. This week, companies that will release include the likes of Amazon, Google, Facebook, Twitter, Apple, and Boeing. As these companies release, investors will focus on a number of themes.
First, on Boeing, they will want to hear from the executives at the company on when the 737 Max will be safe to fly. The company has been working on fixes to ensure that the plane is safe to fly again after two accidents killed more than 400 people.
Second, results from companies like McDonalds, Starbucks, and Chipotle will be good indicators on whether the consumers are continuing to increase their spending. These companies have been forced to increase their prices as a result of higher labor and commodity costs.
Third, with automobile companies like Ford, GM, and Tesla expected to report, investors will be watching on the trends in the industry. The industry has recently faced a number of headwinds, including the carbon mandates in places like Europe. They have also been disrupted by electric vehicle companies like Tesla. Other companies are also creating autonomous systems. In Asia, investors will be focusing on Nissan, which is set to give more details on the restructuring and potential job cuts.
Fourth, in Europe, banks are expected to report. Investors expect these banks to underperform their American peers like JP Morgan and Goldman Sachs. Already, Deutsche Bank has announced a loss for the quarter. BNP Paribas, which took Deutsche Bank’s clients is expected to show progress on the integration process. Credit Suisse will answer on the departure of an executive who was seen as a potential successor to the current CEO.
On the economic calendar, the biggest news will be the decision by the European Central Bank (ECB). The central bank is expected to release its interest rates decision on Thursday. Investors expect the bank to leave interest rates unchanged and signal that they will remain like that for a few more months. This happens as former IMF chair, Christine Lagarde prepares to take over from Mario Draghi, who is widely respected in Europe.
In Turkey, the central bank is expected to lower interest rates from the current 24% to 21.50. This will be the first meeting since President Erdogan sacked the former governor and appointed Murat Uysal, who is expected to lover rates. The question among investors is by how much the rate cut will come.
In the United Kingdom, Boris Johnson is expected to become the new prime minister. He will replace Theresa May, who has failed to take the country out of the European Union in line with the Brexit vote. In recent days, Sterling has declined to the lowest level in 27 months. While Johnson has pledged to leave the EU even without a deal, the parliament voted to prevent the next prime minister from suspending parliament.