Week ahead: Further tech earnings and a crowded central bank agenda

Meta, Tesla and SpaceX were among last week's key earnings releases. Corporate reporting took priority as the macroeconomic calendar offered relatively little news.

Negative free cash flow at Meta and Tesla triggered selling across technology shares. Investors questioned whether increased capital expenditure on AI infrastructure was sustainable.

Brent climbed to $113 a barrel, a five-month high, as persistent Middle East tensions and conflict drove a surge in oil prices.

This week's agenda centres on central bank decisions and the UK budget. Further big tech results will also command attention.

FOMC Rate Outlook: Hawkish Hold Could Pressure Gold

An unchanged policy rate is expected from the Federal Reserve on the 28th. Economic data does not yet make a sufficient case for an increase. With midterm elections due the following week, the Fed also needs to avoid the spotlight.

A 78% probability of a December rate increase remains priced into markets. Even with CPI at 3.7% and PPI at 6.3%, communication from Fed Chair Warsh and officials including John Williams has been carefully calibrated. They have indicated that conditions do not justify raising rates more frequently than quarterly, leaving the Fed willing to wait for now. Investors will examine Warsh's remarks after the decision, as a hawkish tone remains possible.

Core PCE and Q3 GDP releases add another complication: either could extend the market reaction to the Fed meeting or reverse it.

Dollar bulls could return if the Fed keeps rates steady with a hawkish message and both core PCE and GDP beat expectations. Gold could then come under pressure towards 3,940 and the 2026 lows.

ECB Rate Outlook: French Debt Risks Persist

Two recent rate increases precede the ECB's decision on the 29th. June's hike took the deposit rate to 2.25%. September then brought a further 25-basis-point increase after climbing energy prices sent inflation back above 3%. Headline inflation now measures 3.8%, a three-year high.

December appears the most likely window for the next increase, with scant evidence of mounting wage pressures making an October hike look improbable. Policymakers have signalled that rates could rise again, but few have specified a date. A move before year-end therefore remains possible, although the ECB must weigh the potential damage to eurozone economic growth from higher rates.

France could disrupt that timetable if conditions oblige the ECB to intervene to compress spreads. The French budget is expected to remain under discussion over the coming weeks. A widening gap between French and German yields is raising fears of another eurozone debt crisis. Investors will look for any indication that ECB President Christine Lagarde is troubled by bond market movements.

For EUR/USD, a decline towards 1.11 still represents the path of least resistance. Support could nevertheless emerge if the ECB delivers a hawkish hold and Lagarde signals a possible December increase.

BoJ Rate Outlook: Yen Draws Safe-Haven Support

1.25% is the expected holding rate for the BoJ following September's increase. At its October meeting, however, the bank is likely to lift its inflation forecast for fiscal year 2027. Higher oil prices are still working their way through to consumer prices.

September's Japanese core inflation reading reached 2.1% year-on-year. That put it above the Bank of Japan's target for the first time since December, while goods inflation also accelerated to 2.8%.

Markets do not fully price in a 25-basis-point increase until January, despite the stronger case these figures make for a December move. This leaves scope for hawkish remarks from Governor Ueda to bolster the yen. A more dovish Fed or weaker-than-expected US data could make that support particularly effective.

Safe-haven buying has strengthened the Japanese yen over the week. Whether that continues could depend on big tech earnings due on the 28th and 29th, including Alphabet, Microsoft and Amazon. Those results could intensify concerns about huge AI spending and the returns on that investment, potentially extending the yen's gains.