While 2020 has been a forgettable year for multiple reasons, the upcoming week will continue to remain volatile as several companies will be reporting Q3 earnings. This coupled with a second COVID-19 wave might further impact stock markets and investors. 

Around 186 companies in the S&P 500 are expected to report quarterly results in the last week of October. Several Canadian giants such as Suncor (SU), First National Financial (FNLIF), Maple Leaf Foods (MLFNF), Gildan Activewear (GIL), TC Energy (TRP), Canadian Utilities (CDUAF) and Fortis (FTS) are expected to announce Q3 results in this week. 

According to data from Yahoo Finance 68 publicly listed companies on the Toronto Stock Exchange will report quarterly results, in the week ending on October 30. 

All eyes will now be on tech giants such as Apple (AAPL), Alphabet (GOOGL), Facebook (FB) and Amazon (AMZN) all of who are reporting results on Thursday. These companies account for 16% of the S&P 500 and will be key drivers of equity markets in the near-term. 

FactSet forecasts nine out of 11 sectors to report an earnings decline, led by the energy sector. 

COVID-19 wave and federal benefits

It seems that earnings have taken a backseat at a time when COVID-19 cases are on the rise again in North America and Europe. Several federal benefits including the CERB have helped millions of Canadians and businesses amid the pandemic chaos where consumer spending slumped and unemployment rates spiked to multi-year highs. 

Another set of lockdown or restrictions might spell doom for small Canadian businesses. In fact, over 56% of small businesses might not survive if the government implements another economic shutdown. 

A Presidential election in the U.S

Another aspect that will impact equity markets by the end of 2020 will be the upcoming Presidential election in the U.S. Investors can expect markets to be extra sensitive and provide traders with enough opportunities to make a buck or two. 

However, long-term investors should not be worried as elections have little impact on company earnings or the country’s GDP growth rates. 

Pot stocks on your radar

That being said, in case Joe Biden wins the election, there is a good chance for marijuana companies to gain momentum and end the year on a high. Biden and Senator Kamala Harris might decriminalize marijuana use in the U.S. at the federal level which will provide significant growth opportunities for pot producers. 

Further, three more states in the U.S. will legalize medical marijuana by the end of 2020, taking the total count to 38. 

A billion-dollar acquisition

Energy companies have been pummeled in 2020 and it has been the worst performing sector this year. The oil price war and the pandemic has resulted in a massive sell-off in oil stocks resulting in significantly depressed valuations.

Over the weekend, Cenovus Energy (CVE) disclosed it will acquire Husky Energy (HUSKF) for $3.8 billion in an all-stock deal. The combined entity will have an enterprise value of $23.6 billion making it the third largest oil and gas producer in Canada. 

Cenovus expects cost and capital synergies of $1.2 billion and the deal is estimated to close in the first half of 2021.