Key takeaways:

• Commodities rally en masse as speculation grows China could be nearing a turning point on its COVID-zero policy, which would kickstart demand for resources

• Net interest margins (NIM) highlight the path towards earnings and dividend growth for Westpac and NAB

With commodity stocks powering US shares higher on Friday, the ASX looks set to follow in a week headlined by local bank earnings, US inflation data, and midterm elections.

Economic Calendar and News

This week major developments are likely to centre on midterm elections in the US, where polling suggests change could be afoot.

Some polls suggest the Republican party stands to win the House, and potentially even the Senate, which would all but quash the policy hopes of the Biden administration for at least the next two years. 

Central themes in the lead up to the election have been inflation, the economic outlook, and a plunging stock market. History is also stacked against the incumbent party, with only two instances where a sitting president managed to steer an increase in House numbers.

Outside of politics, there is important inflation data ahead, which is sure to sway interest rate policy at the Federal Reserve next meeting in December. Consensus figures suggest annual inflation may have eased fractionally in October to 8%, with core inflation tipped to edge a whisker lower to 6.5%. On home soil, look out for the latest readings on consumer confidence and business confidence, building permits, as well as consumer inflation expectations.Elsewhere, GDP data for the United Kingdom is likely to show a contraction in economic growth during the September quarter, and COP 27, also known as the United Nations Climate Change Conference, will run for the next two weeks.

Stocks on watch

Two of the Big Four' banks hand down earnings this week, with Westpac (ASX: WBC) opening proceedings this morning, and National Australia Bank (ASX: NAB) to follow on Wednesday. 

Across FY22, Westpac reported a 1% decline in cash earnings to $5.3 billion, albeit with an improvement in the second-half, where net interest margins (NIM) increased 5 basis points to 1.9% by the end of the period. During that period, core earnings rose 12%, and net interest income grew 7%.

The bank has recorded growth in mortgages and business lending, while also managing its credit quality, with stressed exposures to Total Committed Exposure (TCE) down from 1.36% to 1.07% year-over-year. Meanwhile, management delivered a 7% reduction in costs once stripped for notable items. On the back of the result, the company has lifted its fully-franked final dividend to 64 cents per share, up from 60 cents per share this time last year.

On the other hand, NAB second-half of the year is expected to yield $3.6 billion in cash profits before notable items, with net interest margins set to be markedly higher over the coming months 

Commodities are one of the major talking points this week following a mega session for resources stocks. Among the catalysts for the broad-based rally in the commodities space were a sharp drop in the US dollar, and growing expectations that China is set to depart from its COVID-zero approach.

Oil futures ended the week with a 5% gain, reclaiming US$92 per barrel for a three-month high, and providing another inflation headwind. Nonetheless, names in the spotlight include Exxon Mobil (NYSE: XOM), BP (NYSE: BP), Woodside (ASX: WDS), Beach Energy (ASX: BPT), and Occidental Petroleum (NYSE: OXY), to name a few.Iron ore lifted more than 5%, which provides a strong foundation to start the week for BHP (ASX: BHP) and Rio Tinto (ASX: RIO), with the duo up 9.8% and 3.9% in New York and London trading respectively, not to mention Fortescue Metals Group (ASX: FMG).There were also big increases for metals, including an 8% lift in copper prices, silver prices rallying 7.6%, and gold prices advancing 3.4%. This should bode well for names like Northern Star Resources (ASX: NST), Newcrest Mining (ASX: NCM), OZ Minerals (ASX: OZL), Sandfire Resources (ASX: SFR), Freeport-McMoRan (NYSE: FCX), and Barrick Gold (NYSE: GOLD).On a separate note, cloud computing stocks are in the spotlight at the moment, with key US names like Atlassian (NASDAQ: TEAM) and Twilio (NYSE: TWLO) savaged during Friday offshore trading session. Both stocks dropped in the vicinity of 30%, with the uncertain macro outlook prompting less spending by corporate clients, and putting downward pressure on their sales outlooks. Locally, ASX cloud stock Xero (ASX: XRO) will come into focus when it reports its first-half results on Thursday.Last but not least, Walt Disney (NYSE: DIS) is set to release its fourth-quarter results on Tuesday, US-time. The company theme parks are expected to bring in record revenue, while the growth of its streaming platform will be put under the microscope amid the inflationary environment, price hikes, and an advertising tier being rolled out. Investors can also expect updates on wage negotiations with a key union representing theme park employees.