Eyes on US Inflation, China Export Data as Global Stocks Face Economic Stress Test

U.S. Inflation, China Domestic Demand

Super Week to Set Direction for Global Stocks

Inflation Risks Loom Despite Hopes for U.S. Big Tech Earnings

Focus on Impact of China’s 550 Billion Yuan Stimulus

U.S. and Chinese stocks are poised for heightened volatility this week, from October 12 to October 16, as investors await major economic data releases. In the U.S., the key questions are whether inflation pressures are building again and whether improving earnings at major companies can be sustained. In China, last month’s trade and inflation data will be central to judging whether the recovery has staying power. With concerns about higher-for-longer U.S. interest rates colliding with weak Chinese domestic demand, data from the world’s two largest economies are set to shape sentiment across global financial markets.

The U.S. will release its September consumer price index on October 14. Markets expect headline CPI to rise 0.6% from a month earlier and core CPI to increase 0.2%. The forecast for annual headline inflation is 3.7%. With higher energy prices adding to inflation pressure, investors are watching whether service-sector prices remained stable.

September producer price data and retail sales are due on October 15. Markets expect headline PPI to rise 0.5% from the previous month and core PPI to increase 0.3%. Retail sales are forecast to grow 0.3%. If inflation comes in above expectations, the prospect of an additional Federal Reserve rate increase could move back into focus.

Investors are also watching remarks from Fed Chair Kevin Warsh. Warsh is scheduled to appear with International Monetary Fund Managing Director Kristalina Georgieva at the IMF-World Bank Annual Meetings in Bangkok on October 15 for a discussion on forces reshaping the global economy. Markets are focused on whether he signals anything about the policy outlook ahead of the Federal Open Market Committee meeting on October 27-28.

Third-quarter earnings season for U.S. companies will also pick up. JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo are due to report on October 13. Morgan Stanley, Bank of America and BlackRock will follow on October 14. FactSet data show S&P 500 companies are projected to post 29.6% growth in third-quarter earnings per share. The results should help show how far increased investment in artificial intelligence is supporting corporate profits.

For Chinese stocks, the biggest variable is last month’s trade and inflation data due on October 14. China’s National Bureau of Statistics will release consumer and producer price figures that day. September export and import data will follow. Investors are watching whether China’s exports continued to grow despite U.S. trade pressure and shifts in the global trading environment, and whether companies regained pricing power even as domestic demand remained weak.

Market forecasts call for China’s CPI to rise 1.1% from a year earlier last month, while PPI is seen up 4.4%. Export growth is forecast at 25.3% and import growth at 23.5%. Stronger-than-expected exports could lift expectations for Chinese manufacturers and exporters. By contrast, weak imports and soft consumer inflation could revive doubts about a recovery in domestic demand.

China’s stimulus measures are also set to influence investor sentiment. The Finance Ministry recently moved to expand fiscal capacity by tapping 550 billion yuan in unused local-government debt quotas, equivalent to about $80 billion. Since the Golden Week holiday, investors have been watching whether increased fiscal spending will translate into infrastructure investment and stronger corporate earnings.

Kim Eun-jung, Beijing correspondent, kej@hankyung.com