Apple’s annual product launch event, a hotly anticipated US presidential election debate and the European Central Bank’s interest rate decision are this week’s big-ticket items. Apple is set to launch the iPhone 16 on Monday, with the new flagship device seen as crucial to its fortunes over the next two years.
Meanwhile, US presidential hopefuls Donald Trump and Kamala Harris square off in Philadelphia on Tuesday. Wednesday sees US inflation data ahead of Thursday’s meeting of the European Central Bank. OPEC is also due to release its monthly report following a steep decline in oil prices amid fears of oversupply.
Here are the week’s key events:
Apple is set to launch the iPhone 16 at its autumn product event with the tagling ‘It’s Glowtime’. Such events are usually market-moving. Apple shares have a habit of rising higher ahead of its product announcements, according to FactSet analysis. However, the stock’s lowest average returns occur during the month of the launches. Over the last 10 years, AAPL has averaged a loss of 3.5% in September.
Investors are hopeful ahead of the launch, with the focus on Apple Intelligence integration into the iPhone 16 model.
“Historically, the iPhone launch event has been a sell-the-news event, with Apple slightly underperforming the market the day of the iPhone launch, and then only modestly outperforming the market in the 3 months following the event,” say Morgan Stanley analysts, who think that whilst it might not be different this time on the day of the launch, there is however potential for Apple shares to “perform better than historical seasonality into year-end as the introduction of the iPhone 16 and Apple Intelligence helps to unlock pent-up demand”.
No hot mics and no studio audience may reduce the opportunity for gaffes, interruptions and grandstanding, but the US presidential election debate taking place in Philadelphia today will nonetheless be of critical importance for the campaign outcome. Trump’s debate victory over Biden ultimately forced the president to step back in favour of Harris. Markets will want to see whether the debate moves the needle of the likely outcome and whether any new policy announcements are made.
Elsewhere, OPEC is set to release its monthly report after a sharp fall in crude prices. Sterling traders should keep an eye on the latest unemployment report and wages data. China’s USD trade balance figures are also slated for release.
Sandwiched between last week’s nonfarm payrolls data and the upcoming Federal Reserve meeting, the latest US inflation report will be the major focus for economic data this week. After a run of hotter-than-expected inflation prints at the start of the year, which kept the Fed “higher for longer”, the data has since turned more decisively in the Fed’s favour. CPI rose 0.2% in July, putting the 12-month inflation rate at 2.9%, its lowest since March 2021.
Elsewhere, check the UK GDP data ahead of the European session and the latest US crude oil inventories later on.
The ECB left interest rates unchanged in July but said September's meeting was "wide open” as it downgraded its projections for growth and inflation in the Eurozone. A 25bps cut at this meeting now looks increasingly certain, particularly as the Fed is a slam dunk to cut this month as well.
Eurozone inflation dropped to a three-year low of 2.2% in August, down from 2.6% in July. The core rate fell to 2.8% in August from 2.9% in July. Eurozone manufacturing PMI data out last week was also very soft and, taken together, continue to build the case for the ECB to cut again in September.
Another factor supporting a cut is the recent growth in negotiated wages, which slowed to 3.55% in the second quarter from 4.74% three months earlier, thanks mainly to a slowdown in Germany. The ECB has long stressed how important the negotiated wage data is to its policy outlook.
Coming off Thursday’s PPI inflation report and weekly unemployment claims data, the US session focus for Friday is on the UoM consumer sentiment and inflation expectations report. Also check in on Japan’s core machinery orders and revised industrial production figures, the French final CPI report for August and the latest Eurozone industrial production figures.
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