US: Can the Dow Jones climb to 30,000?
2020 got off to a rockier start than expected, the US-Iran conflict disrupting the initial goodwill that greeted the New Year. Well, it’s taken a couple of weeks, but the stars seem to have realigned.
The signing of the ‘phase one’ trade deal between the US and China and, a day later, the passing of the USMCA agreement in the Senate provided solutions – some perhaps more temporary than others – to a couple of big issues. Claims from EU Trade Commissioner Paul Hogan that efforts to ease tensions between the bloc and Washington were off to a ‘good start’ only added to the positive atmosphere, as did a solid set of fourth quarter figures from China.
This left the Dow Jones near 29400, with talk turning to its ceiling. In other words, can the index climb all the way to 30,000? In terms of things standing in its way, a lot of its recent concerns have been cleared from the table. An escalation in impeachment proceedings against Donald Trump – or a rogue geopolitical decision from the President – could cause the index to unravel. Ditto a bad earnings season. But for now, at least, momentum appears to be on the side of the Dow Jones.
Interestingly the US is facing a pretty quiet economic calendar. Martin Luther King Day on Monday sort of sets the tone for the week – it’s not until Friday that the region gets some top tier data in the form of its flash manufacturing and services PMIs.
US: Stocks to Watch
As for the week’s updates, Netflix on Tuesday is the undoubted highlight, its fourth quarter release coming between the launches of Disney+ and Apple TV+ last year, and the impending introduction of HBO Max and NBC’s Peacock. Subscription numbers are likely to be the focus.
Halliburton, United Airlines and IBM join Netflix on Tuesday, with Johnson & Johnson on Wednesday and Intel and Comcast on Thursday.
UK: Possible interest rate cut looms over the Pound
Each piece of UK data released at the moment is going to be scrutinised by the pound for its rate cut-prompting powers, especially following last week’s awful GDP and retail sales readings.
Tuesday has the latest jobs report, with wage growth expected to slip from 3.2% to 3.2% including bonuses. The CBI industrial order expectations on Wednesday is then set to increase oh-so-slightly month-on-month, while Friday’s flash services and manufacturing PMIs are both forecast to improve.
UK: Stocks to Watch
In terms of corporate updates, there’s Dixon Carphone on Tuesday, alongside Computacenter and Daily Mail General Trust on Thursday.
Eurozone: Strategic review from new ECB President
Over in the Eurozone there’s the German ZEW economic sentiment reading on Tuesday, and the flash services and manufacturing PMIs on Friday. There’s also Thursday’s ECB meeting, one expected to see the launch of Christine Lagarde’s strategic review.
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