US: ‘Phase one’ trade agreement this week?
According to a tweet from Donald Trump on December 31st, the ‘phase one’ trade deal between the US and China should be signed on January 15th. Then, on January 10th, he muddied the waters somewhat, stating that the agreement could be signed ‘shortly thereafter’. If this lack of clarity persists as Thursday approaches, investors might start to get a bit antsy about any hold up or conflict, potentially endangering the Dow Jones’ recent all-time highs.
Meanwhile, though tensions between the US and Iran do appear to have cooled down, the markets may still be sensitive to the situation, given the gravity of what has occurred between the two nations.
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It’s a fairly busy week for US figures, including inflation on Tuesday, the Empire State manufacturing index on Wednesday, retail sales on Thursday and consumer sentiment on Friday.
More important than all that, however, is a New Year data dump from China. The latest GDP, fixed asset investment, industrial production and retail sales readings are released the early hours of Friday morning, likely setting the tone of trading at the end of the week.
US: Corporate Calendar
But wait, there’s more! On top of the trade agreements, geopolitical tensions and a dense economic calendar, it’s also the proper start of US earnings season. And that means a wave of banking updates: Citigroup, JP Morgan and Wells Fargo on Tuesday, Goldman Sachs, Blackrock and Bank of America on Wednesday and Morgan Stanley on Thursday.
UK: Interest rate cut on the cards?
With Mark Carney, in one of his final speeches as Bank of England chief before he leaves in March, hinting at a potential interest rate cut later this year, there is going to be extra focus on this week’s UK data from the pound.
The monthly GDP reading is joined by the manufacturing and industrial production figures on Monday, while there’s the inflation number – which has been stuck under the 2% BoE target for the last few months – on Wednesday. The week wraps up with a likely terrible retail sales release on Friday, at least if post-Xmas high street updates are anything to go by.
UK: Corporate Calendar
As for those UK companies reporting, there’s boohoo and Taylor Wimpey on Tuesday, Provident Financial and Persimmon on Wednesday and Whitbread, Pearson and Associated British Foods on Thursday.
Eurozone: Geopolitical events to drive momentum
The DAX has seen some big swings since the New Year began, before climbing to a 2-ish year high. There’s nothing on the Eurozone side of things to drive that kind of momentum – Wednesday has the industrial production and trade balance readings, with ECB meeting minutes on Thursday and inflation on Friday.
However, any trade or Iran drama from the US could be cause for the German index to stretch its legs.
