Economic Calendar - Top 5 Things to Watch This Week

By Noreen Burke

Investing.com -- With earnings season now in full swing the week ahead will bring a deluge of results, including from the biggest names in tech. But earnings could be overshadowed as the bitterly contested U.S. presidential election race enters its final week and the back and forth between the White House, Republicans and Democrats over another fiscal stimulus package drags on. There will also be a first look at third quarter GDP from the U.S. and the euro zone. While the figures are expected to point to an unprecedented rebound in growth they will also underline where the recovery had been headed ahead of the second wave and widespread new restrictions that have raised fresh uncertainty over the economic outlook. Here is what you need to know to start your week.

Earnings, earnings, earnings

With almost 170 companies set to report investors will plough through the busiest week of earnings season so far with companies ranging from Beyond Meat (NASDAQ:BYND), Boeing (NYSE:BA), Caterpillar (NYSE:CAT), Honeywell (NYSE:HON), Merck (NYSE:MRK) and Pinterest (NYSE:PINS) scheduled to report results.

The biggest names in tech are also due to report, with Microsoft (NASDAQ:MSFT) reporting Tuesday and Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Twitter all reporting just after the closing bell on Thursday.

More companies have again been offering earnings guidance this quarter, indicating to investors that they can adapt to uncertainty about a global pandemic that may continue deep into next year.

Home stretch

With just over a week left to go to the Nov. 3 U.S. presidential election market participants will be closely monitoring the durability of the Biden trade.

Signs that Democratic challenger Joe Biden, who has widened his lead over President Donald Trump in the polls in recent weeks is on track for a strong finish could bolster clean energy, cyclical stocks and cannabis companies.

But a comeback in the polls by Trump could lift conventional energy companies and tech stocks, which are expected to face higher corporate taxes if Biden beats Trump and Democrats take the U.S. Senate.

An unexpected Trump win could hit currencies such as the Mexican peso and Russian ruble, while boosting the battered U.S. dollar, analysts said.

An uncertain or contested election will likely result in a sustained period of market volatility.

Stimulus saga

The ongoing debate over whether the White House, the Republicans and the Democrats can finally reach an agreement on another coronavirus aid package will remain a key driver for markets in the coming week.

U.S. House Speaker Nancy Pelosi said on Friday it was still was possible to get another round of fiscal stimulus through before the election, but that it was also up to President Trump to act.

But Senate Majority Leader Mitch McConnell, the top Republican in Congress, does not want to bring a large bill to the Senate floor before the election, partly on concerns over the level of national debt and partly because of the sense that the White House is caving into Democratic demands.

The case for additional fiscal stimulus to bolster the recovery is strong, with unemployment benefits being tapered and a resurgence in cases of the virus, which has so far killed more than 224,000 Americans.

U.S. third quarter growth

The key economic data release will be the preliminary estimate of U.S. third quarter GDP on Thursday. Forecasts are calling for a record rebound of 31.9% after a historic 31.4% plunge in the second quarter as the coronavirus pandemic ravaged the economy.

But with stimulus efforts all but at a standstill and virus cases increasing as the pandemic enters its first full winter the outlook for the already uneven economic recovery is deteriorating.

Thursday’s weekly report on initial jobless claims will also be closely watched amid indications that the recovery in the labor market is struggling for momentum.

Euro zone GDP, ECB meets

The euro zone is to release third quarter growth figures on Friday with a strong bounce back expected in the wake of widespread lockdowns. But PMI data on Friday showed that economic activity in the bloc slipped back into decline at the start of the fourth quarter as a second wave of the coronavirus sweeps across the continent, heightening expectations for a double-dip recession.

Separate reports are expected to show that inflation remained in negative territory in October, while unemployment is expected to have ticked higher in September.

Thursday’s European Central Bank meeting will likely see policymakers debating whether the prospect of a double-dip recession means that more stimulus will be needed soon.

--Reuters contributed to this report

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