US, China Markets Face High-Stakes Week as Investors Watch Fed, Big Tech Earnings and Party Plenum

Fed Rates, Big Tech Earnings and China’s Fifth Plenum in Focus

Kevin Warsh’s Policy Signal and Xi Jinping’s Message

Big Tech’s AI Spending Report Card Looms

U.S. stocks are poised to take their cue this week, from October 26 to October 30, from the Federal Reserve’s interest-rate decision and earnings from major technology companies.

In China, the key focus for stock investors is the fifth plenary session of the 20th Central Committee of the Chinese Communist Party. Investors are watching for economic policy messages from the meeting and for any impact that stimulus expectations may have on the market.

The biggest variable for Wall Street this week is the Federal Open Market Committee’s regular meeting on October 27 and October 28. As of October 23, markets were pricing in a 90% chance that the Fed will leave rates unchanged in October, according to CME FedWatch.

Investor attention is centered less on the rate decision itself than on the policy path Fed Chair Kevin Warsh signals afterward. The key question is whether he will hint at another rate increase in December.

The September personal consumption expenditures price index, due on October 29, will also be important. Markets expect headline PCE to rise 0.5% from the previous month and core PCE to increase 0.3%. U.S. third-quarter gross domestic product growth, also due that day in a preliminary reading, is forecast at 3%. If both inflation and growth come in above expectations, concern could mount that the Fed will keep policy tight for longer.

Corporate earnings will also help determine the market’s direction. Alphabet and Microsoft are due to report on October 28, followed by Amazon and SanDisk on October 29. The main question is whether the massive spending on artificial intelligence data centers is translating into profits.

SanDisk’s results and outlook may also serve as a gauge of investor sentiment toward memory-chip stocks, a sector that has seen rising volatility recently. Political uncertainty ahead of the U.S. midterm elections on November 3 could add to market swings.

In China, the fifth plenum running from October 26 to October 29 is the dominant event for equities. It is the last major political event before next year’s 21st Party Congress.

Chinese President Xi Jinping is expected to begin a fourth five-year term at next year’s Party Congress. The meeting’s main agenda is seen as reinforcing party discipline and strengthening policy execution. Xi is also expected to use the gathering to tighten internal discipline and strengthen his power base ahead of next year’s Communist Party leadership reshuffle. While announcing stimulus is not the meeting’s main purpose, the outcome could still affect policy expectations and investor sentiment.

China’s industrial profits for January through September, due on October 27, are also in focus. Markets expect cumulative profit growth to slow to 15.2% from a year earlier, down from 15.7% in the previous reading. The key question is whether the improvement in manufacturing profitability remains intact.

Third-quarter earnings season for companies listed on mainland Chinese exchanges will also wrap up at the end of October. Profitability and future investment plans at individual companies could drive a wider divergence in share performance across sectors.

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