Next week to watch (5-9.02.2024)

05.02.2024 10:58|Analyst Team, Conotoxia Ltd.

Jerome Powell, the Fed chairman, appears to have cooled market expectations for an early US interest rate cut. We found confirmation of these expectations in Friday's non-farm employment data, which positively beat even the most optimistic forecasts of experts. In the new week, we can expect above all a continuation of the earnings season. Data for Q4 2023 will be reported by, among others: McDonald's, Walt Disney or Uber. We will also learn about the interest rate decision in Australia.

Table of contents:

  1. US services sector confidence index (PMI) (January)
  2. Interest rate decision in Australia
  3. German consumer price index (CPI) on a monthly basis (January)
  4. Stocks to watch

Monday, 5.02, 14:45 GMT, US services sector confidence index (PMI) (January)

The Purchasing Managers' Index (PMI) is an economic indicator used to assess the health of an economy's manufacturing and service sectors. It is widely used by investors, analysts and economists as an early warning indicator that can foreshadow trends in production, employment, orders and other key areas of economic activity. Purchasing managers at companies are surveyed and the results indicate expected improvement (above 50) or deterioration (below 50) in the sector. It is used as an early warning of economic change.

According to preliminary data, the S&P Global US Services PMI index for January 2024 rose to 52.9, the highest level in seven months and above market expectations of 51. The improvement may have been mainly due to more orders from customers and news that their inventories were running out. However, new export orders fell marginally. The increase in hiring was due to companies' efforts to catch up and complete unfinished business from January. In order to win new orders, companies kept production cost increases at the lowest level since June 2020, when the current wave of inflation began.

The current analyst forecast is for the PMI to be confirmed at 52.9.

US PMI chart

Source: Tradingeconomics.com

A higher-than-expected reading could have a bullish impact on the USD, while a lower-than-expected reading could be bearish for the USD.

Impact: USD

Tuesday, 6.02, 3:30 GMT, interest rate decision in Australia

At the December meeting of the Reserve Bank of Australia Board, interest rates were kept at 4.35%, in line with market expectations. The decision will allow the bank to assess the impact of previous interest rate rises. Governor Michele Bullock had earlier noted that inflation was rising mainly due to excess demand in the country. She said progress in bringing inflation back to the 2-3% target has been slower than expected and the cost of services is rising. Bank of Australia officials stressed that further monetary tightening will depend on data and risk assessments. The central bank will closely monitor the global economy, domestic demand and inflation and the labour market.

The current analyst forecast is for the interest rate to remain at 4.35%.

chart of Australia's interest rates

Source: Tradingeconomics.com

A higher-than-expected interest rate could be bullish for AUD, while a lower-than-expected interest rate could act bearishly on AUD.

Impact: AUD

Friday, 9.02, 10:00 GMT, German consumer price index (CPI) on a monthly basis (January)

The CPI monitors changes in the prices of consumer goods and services. The CPI is an important indicator because it helps us to understand trends in consumers' purchases and the impact of inflation on their purchasing power. It is calculated on the basis of a basket representing typical consumer spending, covering various categories such as food, housing, transport, etc. Regular measurements of the CPI allow us to track how the prices of these products and services change over time. A positive CPI indicates an overall increase in the prices of goods and services. 

On the other hand, a negative CPI means that prices are lower than the year before. It is an important tool for economists and policymakers to help them understand the impact of inflation on the economy and take appropriate action. For consumers, it is information about how their money is losing value in the context of rising or falling prices, allowing them to adjust spending, plan savings and make financial decisions.

In January 2024, German consumer price inflation fell to an annualised rate of 2.9%, compared to 3.7% the previous month, which was below market expectations of 3.0%, according to preliminary estimates. This was the lowest rate since June 2021, driven by a slowdown in commodity inflation (2.3 versus 4.1% in December). Among commodities, energy costs fell by 2.8, following an increase of 4.1% in December, and food inflation eased to 3.8 from 4.5%. Meanwhile, services prices rose faster (3.4 versus 3.2%). Core inflation, which excludes volatile items such as food and energy, fell to 3.4% in January, reaching its lowest level since June 2022. The EU's harmonised index of consumer price inflation (HICP) slowed to 3.1 from December's 3.8%, also marginally below expectations of 3.2%.

Analysts' current forecast is for a confirmation of January's CPI inflation reading of 2.9%.The level of expected

chart of CPI GermanySource: Tradingeconomics.com

A higher-than-expected reading could have a bullish impact on the EUR, while a lower-than-expected reading could be bearish for the EUR.

Impact: EUR

Stocks to watch

 

 

McDonald's (MCD) announces financial results for the quarter ending December 2023. Forecast EPS: 2.83. Positive earnings surprise in 9 of last 10 reports. Deadline: Monday, 5 February. 

Walt Disney (DIS) announces financial results for the quarter ending December 2023. Forecast EPS: 0.99. Positive earnings surprise in 6 of last 10 reports. Deadline: Wednesday, 7 February. 

Uber Tech (UBER) announces financial results for the quarter ending December 2023. EPS forecast: 0.15. Positive earnings surprise in 7 of last 10 reports. 

Deadline: Wednesday, 7 February. 

AstraZeneca ADR (AZN) announces financial results for the quarter ending December 2023. Forecast EPS: 0.74. Positive earnings surprise in 9 of last 10 reports. Deadline: Thursday, 8 February.

 

Grzegorz Dróżdż, CAI MPW, Market Analyst of 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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71.98% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.98% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Trading on CFDs is provided by Conotoxia Ltd. (CySEC no.336/17), which has the right to use the Conotoxia trademark.