The Week Ahead

During the week ahead the market is likely to look towards a number of key market themes and events which have the potential to indicate financial market moves.

The United States CPI release is the main event of the week this week. A large data dump from the US economy is also on cards alongside trade and CPI numbers from China.

US CPI

Last year consumer prices in the US fell from a peak of 9.1% in June to 7.1% in November. Inflation eased faster than expected in November, with economists having expected CPI to slow to 7.3% from 7.7% in October.

This gave boost to investors who had hoped to see the Federal Reserve slow the pace of interest rate rises heading into 2023. Core consumer price growth subsided from 6.3% in October to 6% in November and is expected to have eased further to 5.7% in December.

Still, some of the optimism around slower rate rises faded after average hourly earnings increased at an annual rate of 5.1% in November, up from 4.9% in October.

Although the Fed raised rates by half a percentage point in December, ending a run of four consecutive 0.75-point hikes, policymakers may be wary about further slowing when they meet at the end of this month.

However, if the Fed overtightens monetary policy, it risks a hard landing. Thursday’s CPI reading could give officials much to consider.

Q3 Corporate Earnings

This week we see the release of major earnings releases from some of the largest supermarkets in the United Kingdom, and also the major United States banks.

Tesco and Marks & Spencer are key UK companies set to release Q3 results. Investor pessimism towards the Marks & Spencer share price is epic as it traded down by over 30 percent in 2022.

The company remains in the midst of a major transformation that began under former chief executive Steve Rowe, who was succeeded by Stuart Machin last May.

This week we also see the major banks, who are also investment style banks releasing results. Citigroup, JP Morgan, and Bank of America are just come of the heavyweights releases Q4 results this week.

In 2022 the rising cost of living prompted banks to adopt a more cautious strategy in their retail divisions, while the volatility in financial markets saw investment banking revenue fall back sharply as M&A activity quietened.