Nov 6 (Reuters) – Traders on the world’s financial markets go into next week hoping the storm engulfing tech stocks blows itself out and for no new escalation in the Iran war that sends oil prices surging again.
There are also key US and Chinese data, the UN’s COP climate summit gets underway in Turkey, Europe will be horse trading over the next ECB chief and there’s a too-close-to-call election in New Zealand this weekend.
Here’s all you need to know about the coming week in financial markets by Dhara Ranasinghe, Alun John and Simon Jessop in London, Lewis Krauskopf in New York and Gregor Stuart Hunter in Singapore.
1/ HOUSE OF P-AI-N
The Democrats’ US midterm win is the latest hammer blow to the once-unstoppable Big Tech trade.
The Nasdaq’s 5.5% slump on Thursday was its biggest since the Liberation Day rout of April 2025 and wiped $2.5 trillion off that one index alone.
Worries had already been intensifying about the stratospheric cost of the AI buildout. Now, post-midterms, the prospect of tougher regulations that slow everything down is hurting just as much.
Democratic wins in Texas and Georgia reflected the voter backlash against the data centres that are at the heart of the AI boom, but are also ugly and loud and require huge amounts of energy and water.
Some sense a compromise might be struck since AI has become a key economic driver. But if the rout resumes next week, growth worries will likely mount and plenty will be wondering whether something somewhere in the financial system tied to it all might break.
2/KEEPING A CLOSE CPI
US data and the direction of oil prices over the next week could determine whether the Federal Reserve hikes its interest rates one more time before the year is out.
Tuesday’s US consumer price index (CPI) — perhaps the most closely watched inflation measure — is expected to show a monthly rise of 0.3%, according to a Reuters poll, while Friday brings another key read on producer prices.
As it stands, traders are pricing in a more than 80% chance of a Fed hike at its December 8-9 meeting. That would take the federal funds rate — the primary driver of global borrowing costs — to 4.00%-4.25% and follow the Fed’s first rise in three years back in September.
Then there’s oil. Crude prices have pulled back this week after the Republicans’ hammering in the US midterms stoked bets that President Donald Trump may look to de-escalate the Iran war. Any signal either way on that will be pivotal.
3/WHO’S IT GOING TO EC-BE?
European economic growth has been surprisingly resilient this year in the face of sky-high energy prices and rising borrowing costs.
The coming week will provide another test with quarterly employment data due, as well as a more refined estimate of quarterly GDP. Last month’s preliminary flash Q3 reading showed 0.4% growth.
If confirmed, it would boost the mood at Monday’s gathering of euro zone finance ministers, where another top topic will be who replaces European Central Bank President Christine Lagarde when she leaves Frankfurt in February.
Nominations are about to be finalised and the expected candidates are former Dutch central bank governor Klaas Knot and Spain’s Pablo Hernandez de Cos, the head of the Bank for International Settlements.
The EU hopes to appoint a new ECB president by its mid-December summit, so it will have to get a move on. Monday’s meeting could be busy.
4/COP SHOW
The UN’s COP31 climate summit kicks off in Turkey on Monday, with more than 80 world leaders expected to attend against the backdrop of worsening extreme weather events that have caused a slew of devastating disasters this year.
With the US not formally involved under climate-sceptic Donald Trump, his humbling in this week’s midterms will be a glimmer of hope for some, although efforts to build coalitions of the willing to phase out fossil fuels and halt deforestation will need to continue.
As the Middle East war keeps oil and gas prices high, host Turkey is also pushing nations to accelerate the shift to green power so that 35% of the world’s power comes from electricity by 2035, from around 23% now.
Overhanging everything, though, will be the thorny issue of money. With development aid getting slashed by many richer countries, vulnerable developing countries will once again be looking for more help to cope with climate change.
5/THRILLER IN MANILA
There will be a flurry of last-minute diplomacy in Manila next week as senior government officials start the final preparations on Friday for the following week’s ASEAN nations summit.
Philippine President Ferdinand Marcos Jr, who is hosting the November 15-17 gathering, has said Chinese Premier Li Qiang will be there, while both President Trump and his Canadian sparring partner, Prime Minister Mark Carney, are expected to attend too.
Indonesia is also likely to come under pressure for its wildfires that blanketed much of the region in thick smog earlier this year, with Singapore already vowing to strengthen an agreement on transboundary haze.
Elsewhere in Asia, China releases inflation data for October on Monday and lending data later in the week, while voters in New Zealand go to the polls on Saturday in an election that looks far too close to call.
(Graphics by Vineet Sachdev; Compiled by Marc Jones; editing by Andrew Heavens)
