The main economic events of this week
2023.01.30 04:07
The main economic events of this week
By Ray Johnson
Budrigannews.com – Both warm and cool enough. Investors are hoping for that in terms of the economic outlook as China recovers from COVID, businesses deal with sticky inflation, and consumers become increasingly cash poor.
However, the narrative told by three of the world’s largest central banks ahead of their first policy meetings in 2023 is not that of a “Goldilocks” scenario in which inflation and growth moderately ease.
From Kevin Buckland in Tokyo, Dhara Ranasinghe and Naomi Rovnik in London, and Ira Iosebashvili and Lewis Krauskopf in New York, here is a look ahead to the week in markets.
In the face of decreasing inflation, will the Federal Reserve stick to its guns or tone down its hawkish rhetoric? At the meeting on February 1, investors anticipate a 25-basis-point rate increase and rates not exceeding 5%.
However, Fed officials have stated that they anticipate the key policy rate reaching its maximum of 5.00-5.25 percent this year.
The Fed’s signals could have a significant impact on how long the rally has lasted thus far this year. Dollar bears, on the other hand, will keep an eye out for dovish comments that could accelerate the decline in the US currency. Since reaching multi-decade highs in September, the currency has lost nearly 11% of its value.
After returning from the Lunar New Year holidays, which lasted a week, Chinese markets will attempt to resume their five-month peak for mainland blue chips. Officials stated that COVID deaths have decreased by about 80% from the peak earlier this month, countering concerns that the New Year’s travel rush would bring about a new wave of infections.
Some experts even contend that the sudden reversal of the government’s zero-COVID policies last month, which led to an uptick in cases, has resulted in hyper-rapid herd immunity. The services sector may return to expansion as a result of China’s Great Reopening, which may be reflected in PMIs on Tuesday. Manufacturing is probably still shrinking, but the timing of the New Year’s holiday has a lot to do with it. Next month, however, should see a strong rebound.
Rates are expected to rise by 50 basis points to 2.5% when the European Central Bank meets on Thursday. It’s unclear why markets care most about what comes next.
In March, policy hawks are already calling for more of the same. After all, preliminary January data due out on Wednesday are likely to show that inflation is well above the target of 2%.
Between now and July, futures anticipate additional tightening of 100 bps. According to Amundi, ECB rates may reach 4%.
However, the doves are becoming louder. They assert that although inflation is high, it has not reached historic highs. Therefore, prior to pre-committing to rate increases beyond February, caution is required.
Markets will be looking for the ECB to speak with one voice because of the conflicting viewpoints. At least that’s the hope.
4/THE “A” TEAM The three “A” companies are Apple (NASDAQ:), NASDAQ: Amazon likewise Alphabet (NASDAQ:) On Thursday, the earnings of all three of the top four U.S. companies based on market value are reported.
As the earnings season gets underway, over 100 businesses in the deliver results. NASDAQ: Microsoft, The fourth megacap in the United States has already released its results. Its cloud business met Wall Street’s goals, but it gave a poor forecast that didn’t cheer up the tech industry as a whole.
In general, tech companies are under pressure to expand while reducing expenses in preparation for a possible recession. Refinitiv IBES data as of Tuesday indicate that earnings for the S&P 500 are expected to have decreased by 2.9% from the same time last year.
It is anticipated that the Bank of England, the first major central bank to adopt a hawkish stance, will announce its tenth rate increase since December 2021.
The BoE is expected to raise rates by 0.5 percentage points to 4%, according to money markets. Although headline inflation decreased to 10.5% in December, it remains more than five times the official Bank of England target.
(ETR:) Deutsche Bank According to analysts, this will be the BoE’s last “forceful” increase. UK business activity has sharply decreased and Christmas retail sales have been disappointing, according to recent data.
Reuters polled economists now anticipate that the BoE will stop at 4.25 percent. However, many of them cited sticky core inflation—which does not include costs for food or energy—as the primary reason they might be wrong.
