US Inflation, China Trade Data in Focus as Global Stocks Face Economic Test

US Focuses on Prices, China on Domestic Demand

Super Week to Set Direction for Global Equities

Inflation Wariness Builds Even as US Big Tech Earnings Raise Hopes

China’s Stimulus Package of 550 Billion Yuan ($76.5 Billion) in Focus

U.S. and Chinese stocks may face heightened volatility this week, from Oct. 12 to Oct. 16, as investors await key economic data. In the U.S., the focus is on whether inflation pressures are picking up again and whether major companies can sustain earnings improvement. In China, last month’s trade and inflation figures will be crucial in gauging the durability of the recovery. With concerns over higher-for-longer U.S. interest rates colliding with weak Chinese domestic demand, the two countries’ data releases are set to shape sentiment across global financial markets.

The U.S. consumer price index for September is due on Oct. 14. Markets expect headline CPI to have risen 0.6% from the previous month and core CPI 0.2%. The annual headline inflation rate is forecast at 3.7%. As higher energy prices add pressure, investors are watching whether services inflation has stabilized.

September U.S. producer price index data and retail sales are due on Oct. 15. Markets expect headline PPI to have risen 0.5% from a month earlier and core PPI 0.3%. Retail sales are forecast to increase 0.3%. If inflation comes in above expectations, the prospect of another Federal Reserve rate increase could return to the fore.

Investors are also watching comments from Fed Chair Kevin Warsh. Warsh is set to speak with International Monetary Fund Managing Director Kristalina Georgieva at the IMF-World Bank annual meetings in Bangkok on Oct. 15 on forces reshaping the global economy. Markets are looking for any remarks on the policy outlook ahead of the Federal Open Market Committee meeting on Oct. 27-28.

Third-quarter earnings season for U.S. companies is also getting underway in earnest. JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo are due to report on Oct. 13, followed by Morgan Stanley, Bank of America and BlackRock on Oct. 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 expanding investment in artificial intelligence is supporting corporate profits.

For Chinese stocks, the biggest variable is last month’s trade and inflation data due on Oct. 14. China’s National Bureau of Statistics will release CPI and PPI figures that day, followed by September export and import data. Investors are watching whether Chinese exports can maintain growth despite U.S. trade pressure and changes in the global trade environment, and whether companies are regaining pricing power as domestic demand remains weak.

Market forecasts call for China’s CPI to have risen 1.1% from a year earlier last month and PPI 4.4%. Exports are expected to have increased 25.3%, while imports are forecast to rise 23.5%. Stronger-than-expected exports could lift expectations for Chinese manufacturing and exporters’ earnings. Weak imports and soft consumer prices, by contrast, could revive doubts over 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 ($76.5 billion) in unused local-government debt quotas. Since the National Day holiday, investors have been watching whether increased fiscal spending will translate into infrastructure investment and corporate earnings.

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