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The global economy enters the week with a heavy data calendar after technology and semiconductor stocks suffered notable declines. Renewed fears over US inflation and the cost of financing massive AI investments are driving the pullback. All eyes are now on corporate earnings to see whether profits can justify elevated stock valuations.
The selloff may also create an opening for sectors that missed the rally, such as consumer staples, healthcare and utilities. Whether that rotation lasts depends on earnings results, the direction of bond yields, and how stable growth and inflation expectations remain.
The US economy begins the week in a delicate balance. Corporate earnings look strong, but inflation and rising bond yields are pushing up the financing costs that companies rely on to fund their large-scale AI projects.
Forecasts point to corporate earnings growth of more than 30% in the third quarter, with AI spending making a significant contribution.
Meta and Tesla lead the earnings calendar, along with Netflix and other companies. The results matter more than beating or missing profit forecasts. Investors are looking for answers to three key questions:
Goldman Sachs estimates, cited by Reuters, suggest that combined capital spending by five major cloud computing and AI companies could reach $1.2 trillion next year. At that scale, any change in spending plans would ripple across many sectors, not just AI stocks.
September data showed US annual inflation rising to 3.7%, above expectations. That has put the risk of tighter monetary policy back at the center of the market narrative.
At the same time, US Treasury yields have been volatile. The 10-year yield climbed to around 5.3% before easing, as equity investors turned to bonds as a safe haven during the tech selloff.
Several major US economic indicators are also due this week:
The Federal Reserve meets on October 27–28. New data and signals from central bank officials will be important in shaping market expectations ahead of the interest rate decision.
In Europe, attention turns to the preliminary October PMI readings, due Friday, October 23, and to Germany's investor confidence index on Tuesday, October 20. Together they offer an early read on manufacturing activity, services activity and investor sentiment in Europe's largest economy.
The data is especially important because it helps show whether economic activity is improving evenly or whether gains are concentrated in a few sectors while manufacturing remains under pressure.
Public finances also remain a key factor for European bond markets. Eurostat is scheduled to publish government deficit and debt data on October 20, including figures for the second quarter of 2026.
Japan's September inflation data tops the calendar on Friday, October 23, alongside preliminary PMI readings that will signal conditions in manufacturing and services.
Inflation matters because of its influence on Bank of Japan policy. Persistent price pressure could strengthen expectations of further monetary tightening, while weaker reading could give the central bank more room to hold off.
China's third-quarter GDP, due Monday, October 19, headlines the Asian economic calendar, together with September industrial production and retail sales.
The data will show whether China can sustain its growth despite weak domestic demand and external pressures.
Market estimates point to GDP growth of about 4.4% year on year, compared with 4.3% previously. Industrial production is expected to edge up from 5.2% to 5.4%, and retail sales growth from 0.4% to 0.5%.
Retail sales will be an important gauge of domestic consumer strength, while industrial production will show whether manufacturing output continues to improve.
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