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The UK, US and the Eurozone in the week ahead


It is inauguration week – but what will that mean for the markets amidst political tensions and covid-19 fears?

US: What’s in store during inauguration week?

This might be the most fraught inauguration in living memory – and that’s saying something given Trump was crowned President 4 years ago to the day.

After the riot on Capitol Hill, and the subsequent (second) impeachment of Trump, the Joe Biden administration is immediately going to be dealing with the Senate trial of the gaudy billionaire, as well as trying to implement its covid-19 stimulus package.

For the markets, attention will be paid to the activity surrounding the inauguration, namely how out of hand the predicted reaction is from Trump’s supporters. Then it will be a case of how quickly Biden and co. can get to work on enacting their $1.9 trillion pandemic relief plans.

Meanwhile the biggest question around Trump’s impeachment is whether or not it will lead to a vote on him being disqualified from running for office in the future. It’s not necessarily the most pressing matter for investors, but there may be some relief if such an agent of chaos was wholesale removed from the political sphere. Again, however, the outcome of this process could lead to further domestic instability, something that the markets will be warily keeping an eye on.

Between Martin Luther King Day on Monday, and the inauguration on Wednesday, the US doesn’t have a lot to offer data-wise. That changes on Thursday, with the usual jobless claims reading – which is in danger of hitting 1 million for the first time since the end of August – accompanied by the Philly Fed manufacturing index, housing starts and building permits.

Friday then sees the flash manufacturing and services PMIs for January, which will give investors some indication of how badly the US economy caught a case of the post-Christmas blues.

US: Stocks to Watch

It’s also a big week for corporate earnings, including the release of Netflix’s fourth quarter figures. After disappointing on subscriber growth in Q3, the pressure is on the global streaming service. Analysts are expecting the net addition of 5.9 million subscribers worldwide – compared to 2.2 million in the third quarter – alongside $6.6 billion in revenue and profits of $1.38 per share.

Joining Netflix on Tuesday are Goldman Sachs, Bank of America and Halliburton, followed on Wednesday by Morgan Stanley and Procter & Gamble, and on Thursday by IBM, Intel and Costco.

UK: Chinese data to set the tone

Without American guidance on Monday, the FTSE’s start to the week may well be determined the state of the Chinese data it’ll wake up to. Of the many figures released pre-open, the most important will be the Q4 GDP reading – expected to rise from 4.9% in Q3 to 6.1% for October to December – alongside the latest retail sales number.

From there you’ve got the UK inflation reading on Wednesday, CBI industrial order expectations on Thursday, and the post-Christmas retail sales figures alongside the flash manufacturing and services PMIs on Friday.

UK: Stocks to Watch

On the corporate side of things, it’s mainly retailers and miners. Rio Tinto and Premier Foods report on Tuesday, with Antofagasta, BHP Group, Burberry, WH Smith and JD Wetherspoon on Wednesday, and Computacenter and Record on Friday.

One also can’t discount the impact of covid-19 headlines on the pound and FTSE alike, especially when the UK is in the midst of record high daily deaths and the threat of even tighter restrictions.

Eurozone: First ECB meeting of 2021

Thursday’s first ECB meeting of 2021 is the Eurozone highlight this week, investors keen to assess how the central bank is feeling in the New Year.

Before that there’s the ZEW economic sentiment and current account figure on Tuesday, and region-wide inflation numbers on Wednesday. Thursday has the ECB conference joined by consumer confidence data, while on Friday there’s the flash manufacturing and services PMIs for Germany, France and the Eurozone as a whole.

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This article is brought to you in association with Spreadex. All opinions expressed in this article are from the author and do not necessarily represent the opinions of The Armchair Trader. You can find out more about Spreadex products and services here, or find more articles from Connor Campbell here.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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