Take five: Earnings, an election and an MSCI headache
SPY•US earnings season gathers pace as China prepares to release economic data, Brazil heads toward a presidential runoff and MSCI’s proposed index changes raise concerns in Indonesia and Turkey. Markets are also watching changing stock-bond relationships.
1. Earnings and China data
Investors are looking to results from Meta Platforms, Lam Research, Texas Instruments, Tesla, Netflix, Procter & Gamble and GE Aerospace. S&P 500 earnings are expected to have risen more than 30% in the third quarter, according to LSEG IBES. China is due to report third-quarter GDP and September retail sales, industrial output and fixed-asset investment; its loan prime rate is expected to remain unchanged.
2. Bonds and Brazil vote
The correlation between stocks and bond yields has turned positive in Europe and the US, meaning yields are more likely to fall when stocks fall. Brazil’s October 25 presidential runoff is also in focus: a poll puts Flávio Bolsonaro at 46% and Luiz Inácio Lula da Silva at 44%, a technical tie. Bolsonaro’s first-round lead was followed by a 7.7% rise in stocks and an almost 4% gain in the real.
3. MSCI warnings
MSCI has proposed removing Indonesia from emerging-market status and a suite of indexes, a move that risks triggering heavy outflows. Indonesia’s central bank meets Wednesday, with its rate at 5.75%. MSCI has also warned Turkey of a potential downgrade if market reforms fall short by mid-2027; Turkish policymakers meet Thursday and are expected to continue cutting rates from 37%.
