Second week of 2024, Bringing focus on Inflation
Highlights: The stock markets are continuing to struggle as we enter another week. European and Asian stocks are trading lower once more. The US employment report released on Friday raised concerns about the likelihood of a rate cut by the Fed in March. The report showed that the country’s employers added a robust amount of […]
Highlights:
- After a mixed US jobs report, European markets head lower.
- This week, inflation dominates.
- This week kicks off the fourth quarter earnings season.
The stock markets are continuing to struggle as we enter another week. European and Asian stocks are trading lower once more.
The US employment report released on Friday raised concerns about the likelihood of a rate cut by the Fed in March. The report showed that the country’s employers added a robust amount of jobs, while wage growth also picked up.
The breakdown showed that a significant portion of the job growth was coming from individuals who are working part-time jobs. Full-time positions also decreased.
The decline in the services sector’s PMI, as well as a rising unemployment rate, have prompted markets to believe that the Fed will start to ease up in March.
This week’s major focus will be on inflation. The release of the Tokyo CPI is scheduled for tonight. Other data will also be released, such as those from China and Australia.
The ability to maintain the low inflation rate is very important for the market. It’s been under pressure due to the fears that the Fed might start to push back its timetable for rate normalization.
The start of the fourth-quarter earnings season has brought with it a fresh round of directional bias in the markets. With the holiday season approaching, traders are closely eyeing signs of US consumption.
The importance of a strong showing in the quarter is highlighted by the overreliance on big tech. AI earnings are expected to once again dominate as investors try to gauge the potential of this new innovation.
The major banks are expected to dominate this week as concerns about a potential hard landing begin to subside.
As the funds from the bad loans are freed up, banks can start to save more. With the Fed’s cautious approach, it could be that the institutions benefit from a slower pace of rate cuts.
Due to the sudden rise in bond yields, many banks have been left with unrealized losses. This has challenged the conventional wisdom that higher interest rates are needed to support economic growth.
