5 upcoming financial events can cause an earthquake in the markets: why is the coming week full of ideas and pitfalls for investors? What is about to happen in the stock markets?
5 financial events are ready to hit the markets next week: what’s about to happen in the World stock exchanges between January 29th and February 2nd?
The Federal Reserve meeting is not the only unmissable event for investors, waiting for clearer indications on when the rate cut that has been priced in by the markets for weeks will begin. Also under the spotlight are the meeting of the Central Bank of the United Kingdom, the publication of new macro data on China, poised between crisis and recovery, and the quarterly accounts of global corporate giants. Finally, banks are protagonists in Europe with financial results in the foreground.
In the summary of Reuters analysts, there are 5 of the most relevant financial themes that can shake stock markets, Forex, and the bond market worldwide.
1. Fed meeting
There should be no surprises on the Fed decision at the meeting on January 30-31: rates will still remain unchanged. Instead, markets are looking for clues as to when the world’s top central bank will start cutting borrowing costs after one of the most aggressive tightening cycles in decades.
Expectations of rate cuts starting as early as March triggered the stock and bond rally at the end of 2023. Investors still believe that 2024 will see the cost of money fall, but stronger-than-expected data and some comments have weakened the conviction for a turning point already in the first quarter.
Signs that Fed chief Jerome Powell favors keeping rates higher for a bit longer could fuel Treasury yields and the dollar.
2. Bank of England
The Bank of England is expected to keep rates stable on 1 February.
The sterling, up about 5% against the dollar in three months, performed well despite expectations of a BoE slower on rate cuts than the Fed.
Now, however, economists expect the BoE to back down on its warning that it will raise rates again if inflation starts to rise again.
Investors also fear that the ruling Conservative Party will cut taxes too generously in its March budget, ahead of elections due later this year. The prospect of entering unsustainable spending territory could damage the pound.
3. China’s PMI
The release of official Chinese Purchasing Managers’ Index (PMI) data on Wednesday could strengthen the argument that a financial stimulus is needed to revive the world’s second-largest economy.
Calls for additional policies to support a weak post-pandemic recovery have so far been met with rescue packages of various kinds. Investors, however, have fled a market that was once a must-have for global portfolios, pushing Chinese stocks to multi-year lows.
The central bank’s deep cut of bank reserves, which will inject some $140 billion in liquidity into the banking system, appears to bring only temporary relief. Although China narrowly surpassed the 5% growth target set last year, analysts are skeptical that the trend can be sustained.
4. Big tech quarterly data
The upcoming week will also see quarterly reports from Apple, Microsoft, Google, Amazon, Meta.
Five of the Magnificent 7 stocks that posted eye-popping gains in 2023 and helped lift the S&P 500 to a new all-time high in January for the first time in two years are back in the spotlight.
With the S&P 500 officially in a bull market, the results of these giants will be crucial in determining whether the index can maintain its momentum.
Overall, S&P 500 companies are on track to post a 4.5% increase in fourth-quarter earnings compared to the same period a year ago, according to LSEG data. Markets are focused on the possibility that corporate earnings will actually be rosier in 2024, as expected, with S&P 500 companies estimated to increase earnings by more than 10% this year.
5. European banks
European banks are more than happy so far, with profits rising and outperforming stocks. The highest rates in decades have seen lenders’ net interest income – the amount they earn on loans minus deposit costs – skyrocket. Shareholder payouts reached record levels.
BBVA reports full-year results on Tuesday, Santande on Wednesday, and Deutsche Bank, BNP Paribas, UniCredit on Thursday.
Investors will be watching for signs that rate increases have peaked, but they will also be evaluating how quickly the quality of banks’ loans is deteriorating.
The fact that higher rates are being passed on to consumers, households, and businesses that have borrowed raises the question of whether lenders can be as generous with buybacks and dividends. Or if, rather, they must increase the provision amounts to deal with possible insolvencies.
Eurozone fourth-quarter GDP data on Wednesday and flash January inflation data on Thursday should give the banking sector and the market further clues as to when the ECB’s cuts might come.
Original article published on Money.it Italy 2024-01-27 10:44:25. Original title: Questi 5 eventi stanno per sconvolgere i mercati
