Start Your Electric Engines

(Reuters) – Tesla (NASDAQ:TSLA) is the first of the "Magnificent Seven" to report earnings as finance chiefs descend on Washington. Markets will gauge business activity in October amid the upcoming U.S. election.

1. ELECTRIC DREAMS

As the latest earnings season rolls in, attention is on Tesla, one of the first major U.S. tech companies to reveal its results. Tesla's shares have dropped this month, following a much-anticipated reveal of its robotaxis that left some investors desiring more practical details. Year-to-date, Tesla's shares have declined around 11%, whereas the S&P 500 has gained 22.5%.

A disappointing Tesla earnings report in late July, alongside underwhelming results from Google-parent Alphabet (NASDAQ:GOOGL), triggered a selloff in U.S. stocks leading to a sharper drop in early August. Investor sentiment on the U.S. economy has improved after a strong jobs report and last month’s 50 basis point rate cut by the Federal Reserve, but a weak earnings report from Tesla on Oct. 23 could raise concerns about tech stock valuations amidst overall market increases.

2. FAR AWAY

Finance officials are heading to Washington, D.C., for the annual International Monetary Fund and World Bank Group meeting to discuss strategies to handle slowing growth and rising debt.

In Kazan, Russia, President Vladimir Putin will host a summit of BRICS leaders, seeking support amidst tensions with the West; leaders from Brazil, India, China, South Africa, Egypt, the UAE, and Saudi Arabia will discuss reducing U.S. dollar dominance.

The political climate is heating up with the U.S. election approaching, a close contest that could lead to a new global trade war if Donald Trump is victorious, a scenario perceived as adverse for worldwide economies.

3. THINGS CAN ONLY GET BETTER

After shocking data from September's business activity revealed a significant contraction in the eurozone, the upcoming October PMIs will likely be under scrutiny to assess the potential for further rate reductions. Initial data for September indicated a slight contraction, but it wasn’t as negative as originally expected. Positive signs have also emerged, as Q3 lending demand increased and German sentiment improved. However, the euro may still lag behind while expectations of faster ECB easing than Fed policy persist.

4. PROOF

Chinese stocks have reflected anticipation for large-scale stimulus from Beijing. China cut rates on Monday as expected. Following the announcement of extensive stimulus measures since late September, several anticipated briefings have yet to provide the specifics the market craves, especially regarding fiscal spending size. Friday saw a surge in stocks following the introduction of swap and relending schemes. Investors might face a waiting period for substantial insights from forthcoming parliamentary meetings, complicating prospects for further momentum.

5. MONEY, MONEY, MONEY

The new Labour government in the UK will present its first budget on Oct. 30, as the nation grapples with strained finances and stalled growth. Investors will focus on new monthly borrowing data this week. Public sector net debt has reached 100% of economic output, with August borrowing surpassing forecasts by 3 billion pounds. Prior to that, finance minister Rachel Reeves highlighted a fiscal "black hole" worth 22 billion pounds, ruling out tax increases on workers. Consequently, stock market investors worry about possible hikes to capital gains taxes. The bond market is also reacting, with lenders rapidly offloading gilts amid speculation regarding increased debt issuance to support public investment.