Week Ahead

Next week, the US CPI report is likely to show inflation rate increased to a new four-decade high and market volatility is set to continue amid increasing bets of a more hawkish Fed stance. The UK will provide an update on the economy in Q4 and central banks in India, Russia, Indonesia, Thailand and Mexico will deliver their monetary policy decisions. Meanwhile, Chinese traders will return from their long-week holiday.

Next week, investors’ focus turns to the US CPI report which is likely to show inflation rate increased to 7.3% last month, a new high since June of 1982. Market volatility is set to continue and a hotter-than-expected reading will raise speculation of a more hawkish Fed stance and pressure Treasury yields even higher. Other important releases for the US include the preliminary estimate for the Michigan consumer sentiment, the NFIB business optimism and trade data.

On the earnings front, Pfizer, Amgen, Walt Disney, Coca-Cola, PepsiCo, Twitter and Under Armour are due to report quarterly results. 76% of the companies who have reported earnings so far beat market forecasts, according to Factset, but there were some surprises on the downside, including from Meta Platforms.

Elsewhere in America, Canada trade balance, Brazil inflation and retail sales, Mexico inflation and industrial production will also be in the spotlight. The Banxico will be deciding on monetary policy and could eventually continue the tightening cycle started in June last year.

In Europe, the UK will publish the preliminary GDP estimate, with markets anticipating a 1.1% expansion in the last three months of 2021. Business investment for Q4, industrial production and trade data are due on Friday as well. Traders will also keep an eye on Germany retail sales, exports, imports, and final CPI figures; Italy retail sales and industrial production; Spain industrial production; Russia inflation; Turkey industrial production and retail sales; and Switzerland inflation rate. The Swedish Riksbank will likely leave interest rates unchanged but the central bank of Russia is expected to deliver another 100bps rate hike while in Poland, the central bank is seen raising borrowing costs by 50bps.

On the corporate front, Maersk, AstraZeneca, GlaxoSmithKline, BP and Unilever are among companies that will report quarterly results.

Meanwhile, the crisis in Ukraine will remain in the spotlight and several political leaders will meet to try to solve the conflicts. German Chancellor Olaf Scholz will meet US President Joe Biden and French President Macron is poised to visit Russia and Ukraine.

In China, traders will return from their long-week holiday and will follow the Caixin Services PMI and credit indicators including new yuan loans. In Japan, important data to watch include household spending, leading and coincident indexes, Eco Watchers survey and producer prices. In India, the RBI is likely to maintain its key repo rate unchanged at 4% but some investors believe the central bank could raise the reverse repo rate. Alibaba, Nissan, Softbank Group, Honda, Toyota, Coal India are among companies due to report earnings during the week.

Meanwhile, both Indonesia and Malaysia will publish GDP growth figures for Q4 and both the Bank Indonesia and the Bank of Thailand are expected to hold rates steady.

In Australia, inflation expectations, the NAB business confidence and the Westpac consumer confidence are also due next week.