The US midterm elections and inflation data will really test the markets this week, as well as GDP data from the UK as it enters a recession.

Top things to watch in markets in the week ahead:

1. U.S Midterm Elections

Joe Biden’s agenda and control of Congress could be at stake this week with two years remaining on his term.

Republicans have been leading in polls and many believe the result will be split by government. GOP potentially control the House of Representatives and possibly Senate for the second period of Biden’s term.

2. U.S Inflation Data

The US is set to release inflation results for this week for October with investors on the lookout for any indication that prices are cooling after a wave of rate hikes by the Federal Reserve.

Jerome Powell, Fed Chief, said last week that policymakers would most likely take rates even higher than initially planned to tame the soaring inflation.

Analysts are expecting the annual rate of inflation to read 8% and the monthly rate of inflation to rise by 0.7%.

3. Stocks

The equities bounced back on Friday but they will be tested in the upcoming days with US inflation data and the US midterms.

Despite the gains, Nasdaq fell 5.65% for the week, its largest weekly percentage decline since January. The S&P 500 was down 3.34% and the Dow Jones was down 1.39% for the week to snap a 4-week winning streak.

4. U.K. GDP Data

Over in the UK, preliminary data on third-quarter growth is expected this week. Economists are expecting a reading that highlights the economy contracted 0.5% in the three months to September.

The Bank of England predicts inflation will hit a 40-year high of around 11% during the current quarter. Britain is on the brink of a recession that could last two years, which would be longer than during the 2008-09 crisis.

(Sources: investing.com, reuters.com)