A super heavyweight week is coming! The Federal Reserve's interest rate cut is almost a certainty, and the earnings reports of the five major tech giants along with the meeting between the Chinese and U.S. presidents are the market focus

According to Zhitong Finance APP, this week will be extremely busy for investors — the Federal Reserve will announce its latest interest rate decision, a large number of companies will release their earnings reports, and the White House previously announced that the Chinese and U.S. presidents will hold a bilateral meeting during the APEC summit.

U.S. stocks surged last Friday and hit a historic high, as the U.S. September CPI data came in below expectations, providing stronger justification for the Federal Reserve to continue cutting rates next week and in December. Data showed that the overall CPI in the U.S. rose 3.0% year-on-year in September, lower than the market expectation of 3.1%; the overall CPI rose 0.3% month-on-month, below the market expectation of 0.4%. Meanwhile, the core CPI, excluding volatile categories such as food and energy, rose 3.0% year-on-year, lower than the market expectation of 3.1%; the core CPI rose 0.2% month-on-month, the slowest growth in three months, below the market expectation of 0.3%.

The Federal Reserve will announce its latest interest rate decision at midnight this Thursday, Beijing time. The market has almost fully priced in a 25 basis point rate cut by the Federal Reserve this week. In addition, the European Central Bank and the Bank of Japan will also announce their interest rate decisions on Thursday.

In terms of corporate earnings reports, investors will face the most significant week. The five major tech giants — Microsoft (MSFT.US), Amazon (AMZN.US), Apple (AAPL.US), Alphabet (GOOGL.US), and Meta (META.US) — will all release their earnings reports this week. Investors will closely watch whether large tech companies can continue to deliver impressive results under the high expectations driven by the artificial intelligence (AI) boom. Additionally, four of the five major global energy giants — Exxon Mobil (XOM.US), Chevron (CVX.US), Shell (SHEL.US), and Total (TTE.US) — will also report their earnings this week. Companies like UnitedHealth (UNH.US) and Verizon (VZ.US) will also announce their latest results.

"A Done Deal" Rate Cut

According to Wall Street analysts and Federal Reserve watchers, the main focus of the Federal Reserve this week will be the labor market, despite the absence of the September non-farm payroll report.

Further rate cuts have almost become a foregone conclusion. Bankrate analyst Stephen Kates stated, "Although the government shutdown has led to a lack of labor market data, the lower-than-expected CPI data should bolster the Federal Reserve's confidence, and the Fed was already inclined to cut rates again in October and December."

Traders currently estimate a 97.6% probability that the Federal Reserve will cut rates by another 25 basis points this week. This would lower the federal funds target rate range from the current 4.00%-4.25% to 3.75%-4.00%.

Bank of America analysts noted in a report last Friday, "In the absence of the September employment report, an October rate cut has almost become a 'done deal'." The report also added, "While we have not yet predicted another rate cut in December, if no new employment data is released before the December meeting, the Federal Reserve may be inclined to cut rates again." Bank of America analysts pointed out that, based on comprehensive private sector data, Federal Reserve surveys, and state unemployment claims data, the labor market has "at best remained stable, and at worst slightly deteriorated" since the government shutdown delayed employment reports.

On the political front, the U.S. government shutdown is increasingly linked to the labor market. Last week, federal employees forced to take leave due to the shutdown missed their first paycheck. The current U.S. government shutdown has become the second longest in history, only behind the 35-day shutdown in 2018.

Trade Issues Back on the Negotiation Table

The White House announced last Thursday that the U.S. and Chinese presidents will hold a bilateral meeting during the APEC summit. Theoretically, this meeting will provide an opportunity for the two leaders to negotiate and resolve the ongoing trade war.

However, market uncertainty is still unlikely to dissipate immediately. Macquarie Group's global foreign exchange and interest rate strategist Thierry Wizman stated, "We do not believe that a sufficiently significant agreement will be reached between the U.S. and China in the coming days to alleviate traders' concerns."

Additionally, it is worth noting that the U.S. Treasury last week blacklisted Russian oil giants Rosneft PJSC and Lukoil PJSC. This is the latest move by the Trump administration to pressure Russian President Vladimir Putin to negotiate an end to the war in Ukraine. It is estimated that these two oil companies are the largest oil producers in Russia, accounting for nearly half of Russia's crude oil exports, with an average daily export volume of about 2.2 million barrels in the first half of this year.

As a result of this news, oil prices surged last Thursday. If oil prices remain high, historical experience shows that refiners, who convert crude oil into gasoline, often pass on costs to downstream consumers. This means that after several months of declining oil prices, American consumers may once again face rising gasoline prices. In addition to the potential rise in oil prices, Goldman Sachs economists expect that companies will pass on about 70% of the costs from tariffs to consumers, which means that the prices of everyday goods will further increase