30.01. – 03.02.2023.
Monday 30.01. 09:00 GMT Germany Gross Domestic Product (GDP) QoQ and YoY
GDP is regarded as the broadest measure of the nation's economic activity and a key indicator of its economic health.
Germany reached the pre-pandemic output level only in Q3 of 2022, which is later than other member states. Driven by the ongoing recovery of private consumption of households - benefiting from savings induced by the pandemic as well as reopening of numerous services and activities - the German economy grew through the first three quarters of the year but is believed to have stagnated during the last quarter.
The Q4 is forecasted to show nominal growth, while the German government has expressed a forecast of 1.9% growth in year-on-year terms. Meanwhile, Economic surveillance of EU economies has predicted a 1.6% growth in the same period.
Better-than-expected results may be considered bullish for the euro, while lower results may have a bearish effect on the euro.
Impact: EUR
Tuesday 31.01. 01:30 GMT China Manufacturing Purchasing Managers Index (PMI) January
The China Manufacturing Purchasing Managers Index (PMI) provides the first indication of economic activity in the Chinese manufacturing sector each month. Every month, a questionnaire is sent to 700 manufacturing companies in China, asking them about their purchasing activities and supply readings.
China's PMI contracted for the fifth month in a row in December as production was disrupted amid an increase in the number of Covid-19 cases. As China tries to regain momentum after reopening its economy from the zero-covid policy, investors worldwide are watching China's success in this area. As China's PMI for January is reported, financial markets worldwide may show increased volatility.
Better-than-expected results may be seen as bullish for the CNY, while lower results may be bearish for the CNY.
Impact: CNY
Wednesday 01.02. 10:00 GMT Eurozone Consumer Price Index (CPI) YoY January
The Consumer Price Index (CPI) measures the change in prices paid by consumers for a particular basket of goods and services over a certain period. This information will show changes in comparison to one year ago. CPI is the key indicator for inflation - higher index means higher inflation.
While inflation in the eurozone is seen to fall from its peak in November 2022, it is still well above what is considered sustainable. The official forecast for the CPI in January 2023 on a year-on-year basis is 9.0%, compared with the previous reading of 9.2%, indicating a continuous downward trend in inflation.
High inflation is currently being battled by the hawkish ECB's policy of increasing interest rates, which is badly taken by the stock market. Meanwhile, the EUR against other currencies is expected to appreciate due to higher interest rates. CPI is reported ahead of ECB's interest rate decision later this week and may impact its decision about interest rates.
Impact: EUR, STOXX, and other indices
Wednesday, 01.02. 15:30 GMT US Crude Oil Inventories
Crude Oil Inventories measure the weekly change in the number of barrels of commercial crude oil stored by US companies. The level of inventories affects the price of petroleum products, which could have an impact on inflation.
If the increase in crude inventories is larger (or a decline is smaller) than expected, it indicates a weaker demand and is bearish for crude prices.
If the increase in crude is smaller (or a decline is higher) than expected, it implies greater demand and is bullish for crude prices.
Impact: Oil
Wednesday, 01.02. 19:00 GMT Fed Interest Rate Decision
Possibly the most awaited macroeconomic announcement at this time is the vote by members of the Federal Open Market Committee (FOMC) on whether or not to change interest rates and by how much. Investors are watching interest rate changes as short-term interest rates are the key factor in currency valuations, and the stock market is expected to react negatively to rising interest rates.
FOMC has been raising interest rates for the last 7 meetings and is expected to hike the rate also this time but lower the step from 50bp to 25bp, increasing the rate to 4.75%.
A higher-than-expected rate is bullish for the USD and bearish for the stock market, while a lower-than-expected rate is bearish for the USD and bullish for the stock market.
Impact: USD, S&P500, and other indexes
Thursday, 02.02. 13:15 GMT Eurozone Interest Rate Decision
In a similar vein to the above, the ECB is also expected to raise its key rate in order to fight inflation. While the FOMC is expected to raise rates by 25bp, the ECB is expected to raise rates by another 50bp - to 3.00%. The ECB has started to raise rates later than the US - it has only raised rates 4 times in a row, and it is also at a lower level than the US.
A larger increase could be bullish for the EUR and bearish for the equity market, while a smaller increase could be bearish for the EUR and bullish for the equity market.
Impact: EUR, DAX, STOXX, and other indices
Stocks to watch
Exxon Mobil (XOM) announcing its earnings results for the quarter ending on 12/2022. Forecast: 3.33. Positive earnings surprise in 8 out of the last 10 reports. Time: Tuesday, January 31, before the market opens.
Caterpillar (CAT) announcing their earnings results for the quarter ending on 12/2022. Forecast: 4. Positive earnings surprise in 10 out of the last 10 reports. Time: Tuesday, January 31, before the market opens.
McDonald's (MCD) announcing its earnings results for the quarter ending on 12/2022. Forecast: 2.44. Positive earnings surprise in 7 out of the last 10 reports. Time: Tuesday, January 31, before the market opens.
Meta (META) announcing its earnings results for the quarter ending on 12/2022. Forecast: 2.44. Positive earnings surprise in 6 out of the last 10 reports. Time: Wednesday, February 1, after the market closes.
Apple (AAPL) announcing its earnings results for the quarter ending on 12/2022. Forecast: 1.95. Positive earnings surprise in 9 out of the last 10 reports. Time: Thursday, February 2, after the market closes.
Alphabet (GOOGL) announcing its earnings results for the quarter ending on 12/2022. Forecast: 1.18. Positive earnings surprise in 7 out of the last 10 reports. Time: Thursday, February 2, after the market closes.
Amazon (AMZN) announcing its earnings results for the quarter ending on 12/2022. Forecast: 1.1815. Positive earnings surprise in 7 out of the last 10 reports. Time: Thursday, February 2, after the market closes.
Santa Zvaigzne-Sproge, CFA, Head of Investment Advice Department at Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement, or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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