Investing.com -- It's a big week ahead for global markets, with the Fed expected by many to cut interest rates again after another quarter of insipid economic growth (figures for that are also due out on Wednesday). It's also been a big weekend for Argentina, where left-wing populists returned to power in a fresh sign of unrest sweeping across South America, and for Microsoft (NASDAQ:MSFT), which notched a big win in the Cloud against arch-rival Amazon (NASDAQ:AMZN). Meanwhile in Europe, the EU formally agreed to a three-month extension of the deadline for Brexit. Here's what you need to know in financial markets on Monday, 28th October.
1. Stocks to open near all-time highs
U.S. stock markets are set to open with a fresh run at all-time highs on Monday after China’s Ministry of Commerce said at the weekend that technical consultations on some parts of the interim trade deal being hammered out with the U.S. were “basically completed.”
By 6 AM ET, Dow futures were up 74 points or 0.3%, while the S&P 500 Futures contract was up 0.2% and the Nasdaq 100 futures contract was up 0.3%.
The news comes at the start of a big week for global markets, which have been dragged lower for most of the year by the economic slowdown caused by the U.S.-China trade dispute. The dispute has caused an economic slowdown that has forced most of the world’s central banks to ease monetary policy substantially. Both sides have claimed in the last few days that technical agreements on an interim trade are basically completed.
The Federal Reserve’s policy-making committee is due to decide on Wednesday whether or not to cut interest rates for a third time this year (Investing.com’s Fed Rate Monitor Tool says there’s a 93% chance). That will follow the first reading for U.S. GDP in the third quarter. The Bank of Japan will hold its own policy-making meeting on Thursday, while the euro zone will release 3Q GDP on the same day.
2. Microsoft's JEDI victory over Bezos
The U.S. government awarded a multi-billion dollar contract for cloud computing services to Microsoft (NASDAQ:MSFT), dealing a blow to Amazon.com (NASDAQ:AMZN), the biggest player in the sector.
The Joint Enterprise Defense Infrastructure contract, or JEDI as it’s inevitably known, could be worth as much as $10 billion, according to reports.
The award is the clearest illustration yet of the growing threat to Amazon (NASDAQ:AMZN) Web Services’ dominance of the cloud-hosting business. That’s important because AWS has been by far the biggest profit generator for Amazon in recent years. Earnings released last week showed that AWS’s quarterly sales growth slowed to 35%, while Microsoft’s Azure unit grew by 59%.
Others investing heavily in rivalling Amazon (NASDAQ:AMZN) include Google (NASDAQ:GOOGL), Alibaba (NYSE:BABA) and Oracle (NYSE:ORCL).
3. Alphabet's earnings due; LVMH bids for Tiffany
Alphabet heads the list of companies reporting quarterly earnings Monday. It’s expected to report earnings per share of $12.28 on $40.3 billion of revenue after the closing bell.
Also reporting after the bell will be Beyond Meat, T-Mobile US and chipmaker NXP.
To get the ball rolling before the opening, there’ll also be updates from Walgreens Boots Allianceand AT&T, which will be scrutinized for the pace of debt reduction and the company’s plans for HBO in the ongoing streaming wars.
Earlier in Europe, Spotify (NYSE:SPOT) reported earnings a little ahead of expectations, while Europe’s largest bank HSBC (NYSE:HSBC) signalled a major restructuring ahead after reporting a 24% drop in profit in the third quarter. Meanwhile, LVMH (PA:LVMH) confirmed an approach for Tiffany & Co (NYSE:TIF), reported to be in the region of $14.5 billion.
4. EU approves Brexit extension
The European Union formally agreed to a three-month extension of the deadline for Brexit until the end of January 2020, according to a tweet from EU Council President Donald Tusk.
The exact terms, which will be formalized in writing later, are expected to include the possibility of an earlier exit if the U.K. parliament can ratify the withdrawal agreement struck 10 days ago by the EU and Prime Minister Boris Johnson.
The House of Commons is scheduled to vote later Monday not on the withdrawal agreement, but on whether to hold a general election in December in the hope of breaking the deadlock on Brexit. The chance of the House passing legislation enacting the withdrawal agreement before the proposed election date is slim.
The pound posted modest gains to stand at $1.2848, while the euro inched higher against the dollar to $1.1093
5. Peronists sweep back to power in Argentina
The left-wing populist candidate Alberto Fernandez won Argentina’s presidential election, posing fresh questions about the stability of the G20 country, which is struggling to meet the terms of its $56 billion bailout from the International Monetary Fund.
Argentina’s central bank immediately tightened existing capital controls, cutting the amount of dollars it would allow people to buy to $200 a month from the previous limit of $10,000.
The result shows spreading discontent in South America, caused not least by the Fed’s tightening of U.S. interest rates last year and the drop in commodity prices as a result of China’s economic slowdown. In the last month alone, there have been fatal civil disturbances in Chile and Ecuador, the latter of which is also struggling under an IMF program.