US sharemarkets traded to fresh all-time highs last week, supported by strong earnings reports and solid economic data, despite key measures of inflation rising sharply in the US, Europe and New Zealand.
Here are the top five things to watch in markets this week.
1. September-quarter earnings season
September-quarter earnings reporting season continues this week with updates from US tech giants including Facebook (FB), Amazon (AMZN), and Apple (APPL).
The share price of Facebook has fallen more than 17 per cent since the start of September after an interview with whistleblower Frances Haugen, who accused the company of putting profits ahead of safety, and after the company’s services outage, which caused a surge in interest in alternative platforms.
Last Friday alone, the share price of Facebook fell 5 per cent after rival social media platform Snap closed 26 per cent lower on weak guidance.
Nonetheless, Facebook is expected to see Q3 revenues of $29.6 billion, up from $21.47 billion the year before.
EPS is forecast to increase to $3.17 from $2.71, according to Reuters.
2. US GDP
In the US, September-quarter GDP growth will slow sharply to ~2.8 per cent annualised after rising 6.7 per cent in the June quarter, reflecting the impact of the Delta variant, rising prices, and supply and labour shortages.
3. Crude oil and CPI
This morning, crude oil is trading above $84 per barrel, building on last week’s 1.8 per cent gain, following an easing of COVID-19 restrictions fuelling demand against a backdrop of tight global supply and low inventories.
Rising fuel costs at the bowser are expected to be a driver of this week’s Australian inflation figures for the September quarter, expected to increase by 0.8 per cent over the quarter and 3.8 per cent over the year.
4. Will the ASX200 make a new all-time high?
The ASX200 closed up 0.7 per cent last week at 7415, its highest weekly close since late August but still ~3 per cent below its August 7632 high.
After breaking above key resistance at 7450 in a strong start to trading on Monday, the ASX200 appears set to follow the lead of Wall Street and make fresh all-time highs in coming sessions.
5. What comes next for Bitcoin?
After making fresh all-time highs above $67,000 last week following the listing of the first US Bitcoin ETF, the price of Bitcoin has fallen 10 per cent on the back of profit taking and as traders rotate into altcoins such as Ethereum.
We favour reopening Bitcoin longs on a corrective pullback towards the high to mid-$50,000s in expectation of a rally above $70,000 into year end.
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