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Top 5 things to watch in markets in the week ahead

Published 02/11/2024, 07:32 PM
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Investing.com -- Tuesday’s U.S. inflation figures will be in focus as markets look for clues on the timing of interest rate cuts from the Federal Reserve. Earnings season continues, oil prices look set to remain choppy, while the UK and Japan are to release what will be closely watched economic data. Here’s what you need to know to start your week.

  1. U.S. inflation data

After recent strong jobs and growth data saw markets push back bets on the timing of Federal Reserve interest rate cuts, all eyes will be on Tuesday’s inflation report for January.

Any signs that price pressures are rebounding could push rate cut bets even further into the future.

Economists are expecting a 0.2% rise in consumer prices from the prior month, for an annual increase of 2.9%. Underlying inflation is seen increasing 3.8% from a year earlier.

Market watchers will also get the chance to hear from several Fed officials during the week, including Richmond Fed President Thomas Barkin, Atlanta Fed President Raphael Bostic and San Francisco Fed head Mary Daly.

The economic calendar also includes retail sales figures for January on Thursday along with the weekly report on initial jobless claims, while a report on producer price inflation and preliminary data on consumer sentiment is due out on Friday.

  1. Earnings

Earnings season continues in the week ahead after the S&P 500 closed above 5,000 for the first time on Friday and Nasdaq briefly traded above 16,000, boosted by megacaps and chip stocks, including Nvidia (NASDAQ:NVDA) along with upbeat earnings results.

With results in from about two-thirds of S&P 500 companies, LSEG data now shows Wall Street estimates for fourth-quarter earnings growth of 9.0% versus expectations for 4.7% growth on Jan. 1 while 81% of companies are beating estimates, compared with a 76% average in the previous four reporting periods, according to Reuters.

Investors will be looking ahead to results from Shopify (NYSE:SHOP) and Marriott (NASDAQ:MAR) on Tuesday, Kraft Heinz (NASDAQ:KHC) and Cisco (NASDAQ:CSCO) are due to report on Wednesday and Wendy’s (NASDAQ:WEN) and Trade Desk (NASDAQ:TTD) will report on Thursday.

  1. Oil prices

Oil prices look set to remain volatile in the coming days after they settled higher on Friday, notching up a weekly gain of 6%.

Prices were boosted by heightened concerns over supply from the Middle East amid ongoing conflict in the region and as significant U.S. refinery downtime, both planned and unplanned, tightened product markets.

The gains for the week followed a 7% loss in the prior week.

"We believe that this type of week-to-week wide price swings will further characterize the crude markets through the rest of this month short of major bullish headlines out of the Mideast that could force adjustment in global oil balances," Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois told Reuters.

  1. UK data

The UK is to release what will be closely watched jobs, inflation and growth data in the coming week as investors try to determine the timing of the Bank of England’s first rate cut.

Tuesday’s employment report is expected to show that wage growth is moderating as the labor market cools, but it may still remain too high for the BoE’s liking.

Wednesday’s CPI data could further complicate the monetary policy outlook. The BoE reckons inflation will return to its 2% target this year but has warned it could rise again in the third quarter.

On Thursday GDP data will illustrate how elevated interest rates are continuing to impact the economy, which stagnated in the second half of last year.

  1. Japan GDP

Japan is to release preliminary GDP data on Thursday, with growth expected to have rebounded in the fourth quarter following a contraction in the third quarter as inflation weighed on household spending and corporate investment slowed.

The data will be closely watched as markets ramp up bets on the Bank of Japan ending its negative interest rate policy, in place since 2016. The BOJ has been laying the groundwork to end negative rates by April.

The GDP data is also likely to indicate that Japan’s economy has slipped into fourth-largest place globally, behind the U.S., China and Germany.

--Reuters contributed to this report

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