5 global market themes to watch out for this week

Global markets brace for a packed week of central bank decisions, mega-cap tech earnings, and major political developments. Investors will assess the Federal Reserve’s policy outlook, the sustainability of the artificial intelligence (AI) rally, Britain’s budget plans and elections in Israel and Brazil. China’s leadership meeting will also draw attention amid trade tensions and weak domestic demand. (Source: Reuters)

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Central banks take centre stage

The Federal Reserve, European Central Bank and Bank of Japan are set to announce monetary policy decisions this week, with investors closely watching their guidance on inflation and interest rates. The Bank of Canada and Reserve Bank of New Zealand are also scheduled to meet, with markets anticipating rate hikes. Elevated oil prices could complicate the inflation outlook and influence policymakers’ decisions.

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Big tech earnings put AI rally to the test

Quarterly results from Alphabet, Microsoft and Amazon will be a key test for the AI-driven stock market rally. Investors will scrutinise revenue growth, earnings performance and capital expenditure plans, particularly spending on data centres and AI infrastructure. With roughly one-third of S&P 500 companies due to report, the results could determine whether strong corporate earnings can sustain elevated equity valuations.

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UK budget and elections add political risk

Britain’s Finance Minister John Healey faces the challenge of providing relief to households grappling with higher energy costs while maintaining fiscal discipline and investor confidence in government bonds. Meanwhile, Israel’s election could lead to prolonged coalition negotiations, while Brazil’s presidential runoff is expected to influence investor sentiment towards Latin America’s largest economy. Fiscal policy and political stability will remain key market drivers.

Agencies

5/5

China’s leadership meeting in focus

China’s top leadership will convene for a four-day Fifth Plenum, with discussions focused on party governance and discipline amid rising geopolitical tensions and US technology restrictions. Investors will also watch for signals on Beijing’s economic priorities as weak domestic demand continues to challenge growth. The meeting could offer clues about China’s policy direction and its response to external economic pressures.