LONDON (Reuters) - Following are five big themes likely to dominate the thinking of investors and traders in the coming week and the Reuters stories related to them.
Time for another slice of Apple.
Amazon, Google and Twitter may have helped put to bed worries of a mass tech roll-over, but investors will be nervously awaiting results from Apple due on Thursday after reports of tepid demand for its new iPhones.
Just by its size it will have a strong impact on market sentiment. But for all the focus on the gains made by the U.S. FAANGs as they have come to be known (Facebook, Apple, Amazon, Netflix, and Google), there are other stocks that are roaring.
Europe’s tech sector, for example, hit its highest in nearly 16 years this week after stellar results from the likes of ST Micro and AMS - which is up 190 percent this year - and the STOXX 600 tech sector is far outperforming the Nasdaq in dollar terms.
Parts of the new iPhone, and features including face recognition technology and motion sensors, are made or designed in Europe, so Apple’s results could have a far-reaching impact.
Doing the heavy lifting: investors eye tech-tonic shifts for Europe’s industrials
Apple component supplier AMS’s confident forecast boosts share price
Imaging business, Apple link, power up STMicro profits
No end in sight for tech giant share gains
To hear some economists talk, the Bank of England (BoE) is about to make a big mistake - raise interest rates just as the UK economy heads into what could be a major storm.
If all goes as scripted, the bank will hike borrowing costs on Thursday for the first time in more than 10 years, with the consensus for a rise to 0.5 percent from 0.25 percent.
It may be little more than a few basis points, but for markets and sterling in particular it matters.
The currency is up more than 6 percent this year against the dollar but is down over 3 percent on the euro and whether or not this turns out to be a one-and-done move on rates - or the start of something more - could be crucial.
The BoE is not the only central bank in Europe expected to be going for a hike that day. The Czech Republic looks set to raise its interest rates for the second time this year. The Czech crown is the world’s top performing currency, so investors will be watching Prague’s moves closely too.
British inflation at 5-1/2-year high in September, rate hike on track
New Bank of England deputy says not ready to vote for rate hike
Bank of England’s Carney sees Brexit pushing up inflation, slowing growth
Czech central bank’s Hampl: interest rate rises needed
At a key, twice-a-decade Communist Party Congress, Chinese President Xi Jinping set broad “new era” goals for a modern socialist “strong power” with leading influence on the world stage by 2050.
Crucially, while keeping near-term growth targets, China will not set numerical goals to double GDP from 2021, breaking with past practice. In a bid to move from high-speed to high-quality growth, Xi said China would deepen economic and financial reforms and further open its markets to foreign investors.
Its “belt and road” development strategy suggests a vision for China to be more integrated into the world economy. There’s a high degree of synchronisation already. Its manufacturing cycle has been moving in tandem with benchmark U.S. 10-year T-note yields in recent years.
There are many obstacles along the road, high corporate leveraging being the most obvious one, but if Xi’s Chinese dream is to be achieved, it may be that a few decades from now global markets will respond to the Chinese economy and not the other way around.
China says will not set target to double GDP from 2021, in change from the past
China enshrines ‘Xi Jinping Thought’, key Xi ally to step down
Pressure on as “Belt and Road” enshrined in Chinese party charter
China’s focus on quality of growth to be positive for its ratings - Moody’s
2017 has so far been one of the best years ever for emerging markets investors with stellar gains on everything from Chinese stocks to local currency sovereign debt.
So this week’s beating for South Africa’s rand after dire budget forecasts, and pain for other high-yielders like the Turkish lira, have triggered some understandable profit taking.
The wider worry, though, is if the dollar starts barrelling higher and global bond yields climb more meaningfully investors will be back to worrying about the ghosts and ghouls that come with record levels of debt, much of which has been borrowed in dollars.
South Africa’s budget woes raise stakes for Nov. 24 rating reviews
Contagion danger rises as reeling rand hits 11-mth low
The monthly instalment of U.S. jobs data arrives on Friday.
Last month’s figures saw the first monthly decline in non farm payrolls in seven years. The culprit: Hurricanes Harvey and Irma, which hit Texas and Florida. One reason was leisure and hospitality payrolls sliding 111,000, the largest since records began in 1939. Employment at restaurants and bars fell 104,700.
That fall in the sector’s employment shifted “the mix of workers towards higher paying industries” and “biased average hourly earnings higher”, analysts at Morgan Stanley say, but October’s numbers are expected to normalise.
In general, investors will want to see broad-based wage growth. There’s a sweet spot, though, and we could be right in it. Wages are expected to show between 2.5 percent and 3 percent growth after 2.9 percent in September. But if it comes in above 3 percent it could cause concerns about the impact on company profits.
This all matters for the Federal Reserve as it looks to nudge up interest rates again before the year is out. There is also the small matter of who Donald Trump nominates as the next head of the central bank that could also be announced next week.
Reporting by Marc Jones; Editing by Mark Potter