An eventful week ahead

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The renewed conflict between Hamas and Israel is dominating headlines across the world, and understandably so. Aside from the terrible humanitarian costs, economists and strategists and analysing the potential implications for the global economy. The risks to the oil supplies, particularly should the events of the past week create further tensions within the region, being a notable one. There was an initial spike in the price of oil at the start of the week, but by Friday, most of the gains were lost. Gold, always a go-to asset in times of conflict, jumped 5% in the past 5 days, almost touching $1950 dollars an ounce. The US dollar also attracts capital in uncertain times and again this was the case this week, but the gains were modest. Stocks remained possibly somewhat surprisingly resilient as the S&P 500 registered a small gain on the week, there was also demand for bonds as treasury yields fell across the board. Defence stocks had a good week.

The week ended with both economic and corporate news. The economic news came in the form of the release of the latest Michigan Consumer sentiment survey. Consumer sentiment in the US dipped again to a five-month low, as the report missed estimates. On the corporate front, the news was better as JP Morgan, Citi and Wells Fargo all comfortably beat analyst expectations. JP Morgan’s CEO Jamie Dimon, continued his cautious tone in his post-earnings statement describing the current as “This may be the most dangerous time the world has seen in decades”. This week the earnings season starts in earnest as we get reports from several big-cap tech stocks, Tesla and Netflix, and several household consumer names including Procter and Gamble and Johnson and Johnson.  Most sectors will represented at some point during the week.

 Investors also await the latest commentary from Federal Reserve officials, could the recent events influence Fed policy going forward? As well as a slew of economic data including retail sales, building permits and industrial production figures. In the United Kingdom, the economic calendar is packed with important data, including key reports on inflation, unemployment, and retail sales, alongside Gfk consumer confidence and public sector net borrowing. UK consumer price data for September is expected to show annual inflation easing to 6.5%, the lowest since February 2022. There is also a lot of economic data from the world’s second-largest economy as China releases its estimates for third-quarter GDP along with a raft of data as we get some insights if the recent stimulus is having any impact. Stocks are suggesting a modestly brighter start on Monday morning.