Global markets brace for U.S. earnings, China data and MSCI index risks

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Global markets brace for earnings

Highlights

U.S. markets await earnings from Meta Platforms, Lam Research, Texas Instruments, Tesla and others, with S&P 500 Q3 profits expected to rise over 30%.
China's Q3 GDP, September retail sales, and industrial output data are due, with exports exceeding expectations and another $1 trillion trade surplus likely for 2025.
MSCI may remove Indonesia from emerging-market indexes, risking outflows and a rate hike from 5.75%, while Turkey faces a downgrade warning absent reforms by mid-2027.

Key events shaping the week ahead

As reported by Reuters, the coming days bring a cluster of catalysts for global markets, led by results from major U.S. technology companies, a broad batch of Chinese economic indicators and political uncertainty ahead of Brazil's Oct. 25 presidential runoff.

In the U.S., earnings season picks up with Meta Platforms due to report on Wednesday, alongside other closely watched companies tied to the AI investment cycle. Investors are looking for more detail on returns from heavy spending on AI data centers and infrastructure as financing concerns around the buildout grow and technology shares wobble.

Results from Lam Research, Texas Instruments and Tesla are also expected to offer signals on the strength of AI-related demand. Other major companies on the calendar include Netflix, Procter & Gamble and GE Aerospace, while S&P 500 earnings are expected to have risen more than 30% in the third quarter.

China, meanwhile, is due to publish third-quarter GDP data on Monday together with September retail sales, industrial output and fixed-asset investment figures. The loan prime rate follows on Tuesday and is expected to remain unchanged after more than a year on hold.

Strong global demand for semiconductors, clean technology and other manufactured goods continues to support China's economy even as domestic demand remains uneven and higher energy costs weigh. Recent trade data showed exports rising far beyond analysts' expectations, keeping China on track for another $1 trillion trade surplus this year after first crossing that threshold in 2025.

Emerging-market pressure points and bond shifts

Brazil's presidential runoff is also keeping investors alert after Flávio Bolsonaro's stronger-than-expected first-round showing lifted stocks 7.7% and pushed the real nearly 4% higher. A new Quaest poll puts Bolsonaro at 46% against Luiz Inácio Lula da Silva at 44%, indicating a technical tie ahead of the Oct. 25 vote.

Markets are pricing in the possibility that a Bolsonaro victory would bring tighter fiscal policy, although some of that optimism may already be reflected in asset prices. Further gains could depend on the makeup of his economic team and whether investors see a credible reform agenda, while a Lula recovery could reverse the recent rally, particularly for the real, longer-dated bonds and state-controlled companies.

In Indonesia and Turkey, MSCI is adding another layer of difficulty for policymakers already dealing with higher energy prices, rising borrowing costs, AI-related market disruption and geopolitical uncertainty. Indonesia's central bank meets on Wednesday and Turkey's policymakers gather on Thursday.

MSCI has proposed removing Indonesia from emerging-market status and taking it out of a suite of indexes, a step that could trigger sizable outflows and increase pressure for a rate hike from 5.75% instead of a hold. Turkey has also been warned of a possible downgrade if market reforms do not meet expectations by mid-2027, complicating the outlook for policymakers who are expected to keep cutting rates from 37%.

Bond markets are also showing a notable shift after months in which surging energy and food prices linked to the Iran war weakened sovereign debt's role as a traditional hedge. The correlation between stocks and bond yields has turned positive in Europe and the U.S., meaning yields are now more likely to fall when equities decline, restoring some haven characteristics that had been undermined earlier this year.

Our earlier report on the AI-linked tech selloff explained how hotter-than-expected inflation data revived Fed rate-hike fears and pushed technology shares sharply lower. We noted that investors were reassessing the rising cost of financing large-scale AI infrastructure, with highly leveraged names and chipmakers coming under particular pressure as bond yields climbed.

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