In the first full week of the Biden administration, and the final week of January, investors will get an idea of how the States fared in the closing quarter of 2020.
US: How badly did the USA perform in the fourth quarter?
Top of investors’ lists will be any signs of progress on Joe Biden’s $1.9 trillion covid-19 stimulus plan. So far the markets have treated the announcement with caution, aware that there is a big difference between what a bill looks like before and after the Senate chews it up and spits it out.
Nancy Pelosi has said that the House of Representatives will be ‘completely ready’ to pass the bill by February 1st, when the full chamber is back in session. But that’s the easy part. Though the 50-50 upper chamber is tipped in the Democrats’ favour, the ‘filibuster’ rules require 10 Republican senators minimum to back the package.
Any headlines related to the likelihood that it will escape the Senate in a recognisable enough state could drive the markets this week.
Fighting for investors’ attentions will be the Federal Reserve’s first meeting of the year on Wednesday. Jerome Powell and his FOMC pals may be reticent to act until they see how the stimulus package plan pans out. At the same time, US data hasn’t been looking too perky in the last couple of weeks, especially on the jobs and retail front, making it a tricky early get together for the Fed.
The week is also notable for providing the markets with their first look at the USA’s fourth quarter GDP. Estimates are suggesting growth of 7.5% at the annualised rate – less than a quarter of the 33.4% seen in Q3.
As for the rest of the economic calendar, the CB consumer confidence number is released on Tuesday, followed durable goods orders on Wednesday, the usual jobless claims figures on Thursday, and the Chicago PMI and pending home sales on Friday.
US: Stocks to Watch
If that wasn’t enough, it’s a mega-week for earnings. On Tuesday, Microsoft is expected to see adjusted Q2 EPS rise 7.9% to $1.63 year-on-year, with revenue climbing 8.8% to $40.2 billion. Focus will be on its Azure Cloud Services arm, which is heading for revenue growth of 41.4% year-on-year.
Wednesday is then a triple-whammy, with Apple, Tesla and Facebook all reporting. The besmirched social media giant, and conspiracy theory petri-dish, is heading for Q4 EPS of $3.20, while investors will be paying close attention to monthly and daily active users after both grew 12% year-on-year in Q3.
Telsa’s Q4 update is expected to show earnings per share more than doubled to 85 cents, with a 35% jump in revenue to $10 billion. This after it revealed 180,570 deliveries for the fourth quarter earlier in January, a tad higher than the consensus estimates.
Finally, Apple could be heading for its first ever $100 billion quarter when it posts its holiday season Q1 results, with estimates of $105.2 billion – a 14.6% surge year-on-year, thanks the launch of the iPhone 12, and the rise of working from home.
UK: Markets watching Covid-19 headlines
The UK markets could potentially fall prey to covid-19 headlines this week, with little else to distract them from the ongoing crisis.
Tuesday’s jobs report is the one and only data-highlight, taking in the claimant count change number for December, and the unemployment rate and average earnings index figures for November.
UK: Stocks to Watch
In terms of corporate updates, Crest Nicholson is on Monday, with PZ Cusson and Saga on Tuesday, Brewin Dolphin on Wednesday, Wizz Air on Thursday and Evraz on Friday.
As mentioned, not a lot. Which means any speculation over the length and severity of the current lockdown may come to haunt the FTSE and pound alike.
Eurozone
Like in the UK, the Eurozone isn’t exactly overflowing with data. The German Ifo business climate number is on Monday, with German inflation on Thursday, and German retail sales on Friday. Outside of Deutschland, there are also the French and Spanish flash GDP readings at the end of the week.
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