US markets ended a positive week with a largely forgettable session which was held back by a disappointing update from Intel (NASDAQ:INTC).
The company missed estimates on its revenue forecast by some margin, seemingly falling behind in the AI race to the top, with the shares falling by almost 12%. Elsewhere, economic news was more benign, with an inflation read which came in line with forecasts but, equally importantly, showed a slowdown on an annualised basis. Alongside Thursday’s GDP number, the evidence is increasingly suggesting that the ideal outcome of steady growth, inflation under control and a robust economy could yet keep the recessionary wolf from the door.
This week the corporate calendar goes into overdrive, with a particular focus on technology. The likes of Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL). Apple (NASDAQ:AAPL), Meta and Amazon (NASDAQ:AMZN) will all provide updates, as well as Advanced Micro Devices (NASDAQ:AMD). Quite apart from the tech deluge which needs to match lofty expectations following the sector’s stellar run, there are also other pockets of interest. Boeing (NYSE:BA) reports after its recent plane issues, while Exxon Mobil (NYSE:XOM) will also provide an update on the back of another pop in the oil price following escalating tensions in the Middle East.
On the economic front, the Federal Reserve will announce its latest interest rate decision, with market expectations nailed on for a no-change result. The jury remains split between a cut in either March or May, with the expected six cuts this year likely to be the focus of disappointment should the Fed indicate that such a series seems unlikely given current conditions. The non-farm payrolls report is also due on Friday, with consensus pointing to 173000 jobs having been added in January compared to 216000 in the previous month, with unemployment expected to tick up slightly from 3.7% to 3.8%. In the meantime and as the first month of new year trading draws to a close, the main indices have shaken off an unsteady start, with the Dow Jones ahead by 1.1%, the S&P500 by 2.5% and the Nasdaq by 3% so far this year.
Asian markets were generally stronger, despite the announcement that a Hong Kong court ruled that Evergrande would be placed into liquidation after an ultimately unsuccessful run of attempts to save the business. The news was proof if it were needed that the property sector is central to the company’s economic woes, while increasing geopolitical risks emanating from the Middle East further unsettled sentiment.
However, these factors were offset by a decision from the Chinese regulator to restrict the ability of investors to participate in short selling, which is seen as being a major act of support in stabilising the country’s markets. In addition to an incremental list of measures designed to provide some stimulus to the ailing economy, there is at last some optimism in place that the region could be approaching an inflection point.
The UK also faces an important week, with updates from a number of FTSE100 heavyweights such as Diageo (LON:DGE), Shell (LON:RDSa), BT (LON:BT) and GlaxoSmithKline. In addition, the central bank will also be in focus as the Bank of England announces its latest rate decision, although it seems unlikely that it will move from the current 5.25% level. Despite the possibility that the UK may already be in a shallow recession, more recent data has suggested a level of caution will still be required, given wage growth which itself could prove to be inflationary.
In early exchanges, the strength of the oil price provided a tailwind for the likes of BP (LON:BP) and Shell, while some strength in gold also nudged Fresnillo (LON:FRES) ahead. Heightened geopolitical tensions also bolstered BAE Systems (LON:BAES), although market progress was limited by broker downgrades to Schroders (LON:SDR) and Kingfisher (LON:KGF). In the year to date, neither of the main UK indices have been able to demonstrate any progress, with the FTSE100 currently down by 1.2% and the FTSE 250 by 2.2%.