© Reuters
Written by Noreen Burke
Investing.com – Traders are looking forward to a shorter-than-usual trading week due to the holiday, but the most important data will be US corporate earnings and retail sales. The Bank of Japan issues the rate decision, after it reversed course last December. Several data are also issued from China in conjunction with the World Economic Forum in Davos. Here’s the most important thing to know to start the week.
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US retail sales
US retail sales came after their largest decline in 11 months last November, and data fell in December, which will add new indications of the strength of the Fed’s decision to raise interest rates in light of the slowing economy.
Economists expect a -0.8% decline on Wednesday after posting a -0.6% decline in November.
And on the economic calendar, the market is waiting for data: , and, and, with reports of domestic industrial production.
Last week’s data showed that consumer prices fell for the first time in two and a half years in December, as well as sustained hopes of a sustained decline in inflation, which will give the Fed an opportunity to ease the pace of rate hikes.
Market participants see a probability of 91.6% at the monetary policy meeting on January 31st and February 1st.
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Earnings reports
Investors are closely watching US corporate earnings reports to see if they will beat expectations as concerns about rising costs squeeze margins.
On Tuesday, the market awaits the reports of: Goldman Sachs Inc. (NYSE:) and Morgan Stanley (NYSE:), followed by the reports of Procter & Gamble (NYSE:) before the market opens, and after the closing on Thursday, the report of: Netflix (NASDAQ:).
Annual earnings for the S&P 500 are expected to decline by 2.2% for the quarter, according to Refinitiv data.
This would be the first quarterly loss since the third half of 2020 when companies were struggling since the start of the coronavirus.
And it rose by 3.8% in 2023 after falling more than 19% last year, making this the largest annual loss since 2008.
The US market will be closed on Monday in observance of Martin Luther King Day.
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Bank of Japan
Investors are eagerly awaiting, and Wednesday ends amid speculation of further adjustments to the yield curve control policy, in the first phase out of the massive loose monetary policy.
The Bank of Japan surprised the markets last month by increasing the target range for the 10-year bond yield, in a move that suggested the bank may raise rates in the future.
And with the increase in inflationary pressures and the emergence of clear signs of this, which increased the expectations of the normalization of monetary policy by the Bank of Japan.
The data, which is an indicator of the general trends of the State of Japan, indicated the largest pace of rise in 40 years last December, exceeding the bank’s target at 2% for the seventh consecutive month.
Expectations with the American:
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Chinese data
China data comes out with , , and data is expected to come in below expectations with retail sales falling to 7.8% for the fourth consecutive month of decline, and annual growth is expected to decline by 1.8%.
But with China opening its doors, investors are focusing on prospects for the recovery of the world’s second-largest economy.
And with the strong rise in travel rates ahead of the Lunar New Year, which begins on January 21, fears are growing that coronavirus cases will rise.
While the Chinese authorities announced the death of nearly 60,000 people with the Corona virus in hospitals since the implementation of the “Zero Covid” policy was canceled, following the outbreak of popular demonstrations.
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Davos
The World Economics Conference is taking place this winter in Davos for the first time since the coronavirus, with world leaders, central bankers, monetary policymakers and CEOs of the world’s largest companies meeting.
The conference will discuss: the problem of the high cost of living in light of the threats of natural disasters and extreme climatic changes, as well as the failure to mitigate the disasters of climate change, which is the biggest risk for the next two years, according to a survey of the participating members.
It also comes on the first anniversary of the Russian-Ukrainian war, from which the global economy is still reeling.
The conference will be attended by: Christine Lagarde, President of the European Central Bank, German Chancellor Olaf Scholz, Secretary of NATO Jens Stoltenberg and Chinese Vice Premier Liu He.
–This report with a contribution from Reuters
