Week Ahead

n the US, earnings reports, Michigan consumer confidence, and trade balance data will take the spotlight. Also, the focus will be on central bank meetings in Australia and India and inflation data in Germany, China, Brazil, Mexico, Russia, and the Philippines. Finally, the UK, Indonesia, and Malaysia will be posting Q4 GDP growth figures, and Canada – the unemployment rate.

The week will be soft in terms of economic data in the US but very busy with earnings. Activision Blizzard, Fiserv, Vertex Pharmaceuticals, CVS Health, Uber, Walt Disney, AbbVie, PayPal, PepsiCo, and Philip Morris International are the leading US companies to publish earnings reports. The University of Michigan will release its preliminary consumer-sentiment index for January. The sentiment likely improved for a third consecutive month to 65, with inflation expectations prolonging their downward trend. Also, investors will follow the Commerce Department trade balance report. The trade gap in goods and services must have widened to USD 68.6 billion in December 2022 from USD 61.5 billion in the previous month, which was the lowest deficit since September 2020. Finally, initial and continuing jobless claims numbers will fuel the debate on whether the job market is cooling or could still surprise on the upside.

The United Kingdom will post its preliminary estimate of fourth-quarter GDP growth alongside business investment, trade balance, manufacturing and construction output. Market projections indicate stagnation in Britain’s economy as high energy prices and rising interest rates weighed on spending. Elsewhere in Europe, preliminary figures for Germany are expected to show consumer prices advanced again in January, bringing the yearly inflation back above 9%.

In the Euro Area, retail sales are likely to decline 2%, the most in a year. Other data to watch includes construction PMIs; France foreign trade; Italy industrial and retail activity; Switzerland unemployment rate; Russia inflation rate; and Turkey industrial output and jobless rate. On the monetary policy front, central banks in Poland and Sweden will decide on interest rates.

In China, January’s inflation print will reveal the impact of the country’s transition from its zero-Covid policy on consumer and producer prices. In Japan, investors await the current account balance for Q4. In India, the RBI is forecast to raise its key repo rate by 25bps to mark the end of its current tightening path as inflation in the country has dropped below the central bank’s upper target of 6% in the last two months. India will also release industrial and manufacturing production for December. Malaysia and Indonesia will report fourth-quarter GDP data. Additionally, Indonesia will publish January’s CPI and December’s unemployment rate.

In Australia, the RBA is expected to hike its cash rate by 25bps for the fourth consecutive decision, extending its tightening campaign to a cumulative 325bps to curb inflation which surged to a 32-year high in the fourth quarter. Other Australian releases cover December’s trade balance and the Ai Group Industry index for January. Lastly, New Zealand will divulge its January manufacturing PMI.