What happens across this Global Week Ahead?

Global markets are starting to wake up to the reality of:

• Borrowing costs at two-decade highs
• Oil above $100 a barrel, and 
• Central bank rate hikes

These are heaping pressure on governments, investors and households, and eroding some of the AI-driven enthusiasm in equities.

Add to that:

• Political turmoil in France
• Rising government bond yields and FX volatility
• A cloudy policy rate outlook, and 
• A major election in Brazil

There is plenty of room for surprises across this week.

Next are Reuters’ five world market themes, re-ordered for equity traders—
 

(1) Major FX trading pairs are breaking out of their summer hibernation.

Currency markets are breaking out of their summer hibernation, with the U.S. dollar set to gain and the euro set to struggle.

The dollar index, which tracks the U.S. currency against six others, is up for a third straight week, at its highest in 18 months, confounding bets that 2025's weakness would continue.

Helping are surging growth, high U.S. yields and elevated oil and gas prices — beneficial for an energy exporter, policy permitting.

The negatives elsewhere are as important; there are reasons to worry for the pound and yen, but the euro stands out.

Heavily indebted Eurozone bond markets, such as France, are blowing up, energy costs will weigh on growth, and the combination could limit rate rises.

Not surprisingly, the euro has fallen below $1.13 for the first time since May 2025, while volatility and bets on a steeper decline have picked up.

But in a sign of broader weakness, it has also fallen on the pound, the yen and the Swiss franc.
 

(2) September U.S. FOMC meeting minutes come out.

Investors will seek clues next week about the Federal Reserve's plans for interest rates on the heels of the U.S. central bank's first rate hike in three years.

Minutes will be released on Wednesday that cover the Fed's meeting last month, when it raised rates for the first time since 2023 and suggested more monetary tightening would come before the year is out.

Fed Fund futures heading into the week suggested markets were leaning toward an expectation that the Fed would raise again at the next meeting in October, but such bets have cooled.

Data showed inflation rose less than expected in August, while New York Fed President John Williams said on Tuesday that the central bank had time to weigh economic data before deciding when to hike rates again.
 

(3) In Europe, watch France’s minority government and rising French bond yields.

France's beleaguered minority government has presented its 2027 budget bill, which could result in perhaps weeks of wrangling over spending cuts in a deeply divided parliament, just as opposition parties harden their positions before next year's presidential election.

The tension is palpable.

France's 10-year bond yield, trading near 5%, has hit its highest level since 2002.

On the streets, strikes by students and public sector workers against planned budget cuts aimed at easing pressure on public finances are gaining momentum.

France's debt as a share of economic output is at a record high of almost 120%. It plans to sell a record €340 billion in bonds next year.

With an election looming, market pain is getting worse. The Bank of France chief says the country cannot count on the ECB to fix France's debt problems.

That does not mean the ECB is not watching closely.
 

(4) On Thursday, two key macro readings land — from Japan.

Two key readouts on Thursday will offer a glimpse into how Japan Inc. is coping with the energy shock from the Middle East conflict and a weak yen.

First up is the Reuters Tankan, which mirrors the Bank of Japan's gauge of corporate sentiment and follows its July-September survey showing manufacturers more resilient than non-manufacturers.

The data will offer another clue on whether the BOJ will proceed with a back-to-back interest rate hike this month following September's 25-basis-point increase.

Later that day, the operator of the global Uniqlo clothing chain, Fast Retailing, reports annual results.

It serves as a bellwether for consumer spending in Japan and China.

While analysts expect another solid performance, investors will focus on its guidance and the impacts of rising energy costs and the weak yen on margins.
 

(5) On Sunday, Brazil held a national election.

Brazil went to the polls on Sunday in a vote that will show whether Latin America's biggest economy joins the rightward political shift seen across much of the region, or carves its own path.

Leftist President Luiz Inacio Lula da Silva was expected to ‌clinch a narrow lead in the first round. His challenger was Flavio Bolsonaro, the son of former president Jair Bolsonaro, whose coup conviction after the 2022 election remains a rallying point for conservatives at home and abroad.

However, after voting, Flávio Bolsonaro is now the favorite to become Brazil’s next president after defying polls to take a commanding lead in the first round of voting in Sunday’s elections, heralding the prospect of a major political shake-up in Latin America’s largest country.

Bolsonaro, won 47 per cent of the vote compared with 45.2 per cent for leftwing incumbent Luiz Inácio Lula da Silva, with almost all the ballots counted.

The two will contest a run-off on October 25th.

For investors, the stakes are high. Brazil's elevated interest rates have made the real a carry-trade darling, but they are also squeezing households and businesses and fueling concerns over growth.

Whoever wins, the next president inherits a fiscal headache and markets remain wary that either camp can put Brazil's rising debt burden on a more sustainable path.
 

Zacks #1 Rank (STRONG BUY) Stocks

Next, I picked three “hot” Zacks #1 (STRONG BUY) large-cap stocks.

(1) Palantir Technologies (PLTR Quick QuotePLTR - Free Report) : This is a $190 a share tech growth stock, with a market cap of $456.7B

It is found in the Zacks Internet Software industry. The stock holds a Zacks Value score of F, a Zacks Growth score of B, and a Zacks Momentum score of C.

F12M P/E: 118.2.
 

Image Source: Zacks Investment Research

Palantir Technologies builds and deploys software platforms for the intelligence community principally in the United States.

Palantir Technologies is based in Denver, Colorado.

(2) BP (BP Quick QuoteBP - Free Report) : This is a $44.50 a share oil & gas stock, with a market cap of $116.6B

It is found in Zacks Oil & Gas — Integrated International industry. The stock holds a Zacks Value score of A, a Zacks Growth score of B, and a Zacks Momentum score of B.

F12M P/E: 6.4.
 

Image Source: Bigstock

BP has come a long way since the Gulf of Mexico oil spill incident in 2010, which followed the explosion on the British energy giant's Deepwater Horizon rig.

To combat its huge litigation expenses that stemmed from the disaster, the company embarked on a massive asset divestment program and relied significantly on debt capital. BP successfully settled all litigation with the relatively insignificant cash outlays remaining.

BP has been banking on its strong portfolio of upstream projects.

BP is also on track to capitalize on the global economy's transition to lower carbon fuels. The company has been investing in renewable energy business with a plan to ramp up capital spending for non-oil and gas business. In fact, BP has plans of becoming carbon-neutral by 2050.

Its reportable segments now are: Oil Production & Operations, Gas & Low Carbon Energy, Customers & Products and Rosneft.

It entered a non-binding MOU with Eni to combine their upstream portfolios into a joint venture in Angola.

(3) Quanta Services (PWR Quick QuotePWR - Free Report) : This is a $663 a share Industrials stock, with a market cap of $99.6B

It is found in the Zacks Engineering – R&D Services industry. The stock holds a Zacks Value score of F, a Zacks Growth score of A, and a Zacks Momentum score of C.

F12M P/E: 39.7.
 

Image Source: Bigstock

Quanta is a leading national provider of specialty contracting services, and one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry.

Quanta has operations in the United States, Canada, Australia and other selected international markets.
 

Key Global Macro

Wednesday’s FOMC minutes looks to be a major trader focus.

On Monday, the ISM U.S. services PMI for September lands. Consensus looks for 55.7 from SEPT data, after a 55.4 AUG print.

On Tuesday, Euro Area retail sales for AUG comes out. The prior reading showed a tepid +0.6% y/y rise.

On Wednesday, the latest U.S. FOMC minutes from the SEP meeting come out.

On Thursday, the ECB’s monetary policy meeting minutes come out.

On Friday, the U. of Michigan consumer sentiment index for OCT comes out. A weak 48.1 appeared in the prior print.
 

Conclusion

On Sept. 30th, Zacks Research Director Sheraz Mian shared his EPS growth outlook.

Key points:

(1) Total S&P500 earnings in Q3?

Zacks currently expects the S&P500 EPS to increase +24.1% from the same period last year, on +11.6% higher revenues.

Zacks expects 14 of the 16 Zacks S&P500 sectors to enjoy positive earnings growth, and 6 sectors to produce double-digit growth.

This will be the most broad-based earnings growth performance in recent times.

(2) With Conglomerates (-35.2%) and Consumer Staples (-0.1%) as the only Zacks sectors expected to have lower Q3 earnings — relative to the year-earlier period?

The 3rd quarter is on track to produce an impressively broad-based growth performance. 

Q3 will also be the 8th straight quarter of double-digit earnings growth for the S&P500 index.

(3) Zacks Sectors expected to enjoy double-digit earnings growth in Q3 are:

• Aerospace (+159.7%)
• Energy (+111.8%)
• Info Tech (+42.1%)
• Basic Materials (+29.7%)
• Transportation (+14.4%), and 
• Industrial Products (+13.1%)

Excluding Nvidia, Micron, and Alphabet, which enjoyed an outsized gain in the preceding period.

(4) Micron ((MU Quick QuoteMU - Free Report) ) and Nvidia ((NVDA Quick QuoteNVDA - Free Report) ) continue to be tentpole contributors — to the Info Tech sector’s growth picture.

Excluding Nvidia, Micron, and Alphabet (GOOGL Quick QuoteGOOGL - Free Report) , which enjoyed an outsized gain in the preceding period?

Q3 earnings for the rest of the Info Tech sector would be +20.6% (vs. +42.1% otherwise).

A final summary question: Will borrowing costs, at a two-decade high, interrupt this bull market?

We shall see.

That’s all from me.

Best of luck, in trading and investing!

John Blank, PhD.
Zacks Chief Equity Strategist and Economist