Macroeconomic/ geopolitical developments
- President Joe Biden’s inauguration passed without any notable incident, which was likely a relief for financial markets.
- Four central banks were in play last week, with modest signals from the Bank of Canada and the European Central Bank of less dovish, de facto minimally more hawkish tones.
- Earnings season played a significant role, with most banks and financials beating expectations, whilst Netflix was extremely upbeat, sending tech stocks significantly higher.
- Slight disappointment from Intel and IBM at the end of the week, however, saw US tech setback.
- The Markit Flash Purchasing Managers Index data for the major economic nations for January were released Friday and were broadly worse than expectations.
- The Democrats in the House of Representatives have stated they will send articles of impeachment to the Senate on Monday.
- This will see Trump’s second impeachment trial start this week, charged with “incitement of insurrection” over the storming of the US Capitol.
- In Europe, the political fallout in both The Netherlands and Italy, remain negatives for the wider economic area.
- Lockdown measures through Europe are becoming more aggressive, with travel restrictions being toughened.
- This is in response to the spread of new variants of COVID-19, as cases, hospitalisations and deaths continue to rise.
- In the UK, the vaccine program is seeing success, with further measures being implemented to ensure a rapid vaccination of the more at-risk population.
Global financial market developments
- The major European equity indices broadly marked time, whilst US averages did hit record highs.
- The US Dollar has reinforced its rebound from its 2020 weak position.
- The US currency has been resilient against most of the major currencies, notably versus the Japanese Yen and the “risk currencies” the Australian, New Zealand and Canadian Dollars.
- But, the Pound stays particularly strong with GBPUSD moving to another new multi-year high.
- In the commodity space, Oil saw a modest setback on Friday, but remains close to the multi-month high.
- Copper is still in a consolidation theme since early January strength.
- Gold remains vulnerable since the earlier January plunge lower.
Key this week
- Political events will be closely monitored in the US with Trump’s second impeachment trial likely to begin on 8th February.
- Also watching for further executive orders from President Biden.
- Monitoring new lockdown measures, in the US and Europe.
- New COVID-19 cases, hospitalisations and deaths stay in the spotlight inter US and Europe.
- Markets will monitor further vaccine delivery announcements and approvals.
- Central Bank Watch: Tuesday brings the Bank of Japan (BoJ) Meeting minutes and Wednesday sees Federal Reserve Open Market Committee (FOMC) rate decision, Statement and Press Conference
- Macroeconomic data: Standout data being the German IFO Business Climate, CPI and Employment report, the U.K. Employment report, US Durable goods and GDP.
- Microeconomic data: US earnings season continues, with standouts this week being; Microsoft, Johnson & Johnson, Verizon, Texas Instruments, Starbucks, Apple, Tesla, Facebook, Boeing, Visa, MasterCard, Chevron, and Caterpillar.
|Date||Key Macroeconomic Events|
|25/01/21||German IFO Business Climate|
|26/01/21||BoJ Meeting minutes; U.K. Employment report|
|27/01/21||Australian CPI; US Durable goods; FOMC rate decision, Statement and Press Conference|
|28/01/21||German CPI; US GDP and weekly Jobless Claims|
|29/01/21||Japan CPI and Employment report; German Employment report; Canadian GDP; US Personal Consumption Expenditure, Income and Spending|