Corporate earnings pick up steam on both sides of the Atlantic, while in FX the main focus is the monthly CPI and retail sales data from the US.
US Retail Sales & Inflation
The US inflation conundrum rears its head once again with CPI data for December due on Friday alongside the monthly retail sales release. Figures for November showed a slowing in core inflation, putting the spotlight on whether the Federal Reserve ought to be hiking interest rates as often as it intends in 2018. Core CPI slowed to 1.7% from 1.8% in October and if this trend were to continue the market – which already doubts the Fed will hike 3 times this year – will carry through with its intended path of tightening.
Wall Street Earnings
On Wall Street, earnings season kicks off properly this week with the release of Q4 earnings from the big banks. Wells Fargo and JPMorgan Chase & Co get the ball rolling on Friday. Q3 earnings were positive but a decline in fixed income trading revenues weighed as volatility remains very low. On the other hand, record high equity markets have bolstered money management units and corporate investments.
On the UK corporate front Britain’s housebuilders are in focus again as we get a slew of trading updates from the main listed firms. Persimmon, Taylor Wimpey and Barratt Developments are all due to report and while there have been concerns that house prices are slipping, the supply and demand dynamics of the market remain very much in favour of the builders.
Marks & Spencer Trading Update
After Next’s update last week, the other main high street bellwether, Marks & Spencer, is due to deliver its peak season trading statement on Thursday.
M&S is up against a pretty solid comparative period in 2016, when total UK LFL sales were +1.3% (Clothing & Home +2.3%, Food +0.6%) on the same period a year before, albeit the 2015 Christmas trading period was exceptionally weak. From the half-year report in November it was hard to discern exactly how well management thought the peak season would go.
Source: ETX Capital