Saxo Spotlight: What’s on investors & traders radars this week? Will NZ CPI shock, & Microsoft & Tesla disappoint

Saxo Spotlight: What’s on investors & traders radars this week, January 23-27: US GDP, AU NZ CPI, Microsoft & Tesla earnings 

Risk on tone supported for now as bond yields hold near lows, along with US dollar index

this is supported by the rally in commodities and expected higher earnings from mining companies, which make up 25% of the market. However CPI is a focus this week. Our technical analyst backs up this thinking, that the ASX200 is likely to hit a new all high- for more click here. But the danger this week is if Q4 CPI is hotter than expected on Wednesday, then equities could see profit taking. However overall sentiment is bullish for the ASX as demand for copper and iron ore is likely to pick up after CNY. CPI is expected to rise to 5.8% YoY from 5.6% (trimmed Mean CPI). And CPI YoY is expected to rise to 7.7% YoY, from 7.3%. Hotter data could further fuel the AUD and a likely fuel a sell-off in tech stocks and real estate. In company news to watch, iron ore company Champion Iron (CIA) reports quarterly earnings. Given the iron ore price is up 66% from its low, its outlook is expected to be optimistic.

In commodities Gold and copper are gaining momentum and oil rallies

• The precious metal, gold, has been supported by lower yields and the US dollar falling, which has supported gold up 19% from its September low. As Ole Hansen points out we might need to see ETF holdings pick up in Gold, to see longer term investors getting involved, which could support gold higher, or potentially we may see some profit taking. However, gold momentum remains as long as the USD and yields behave. Recall that if the Fed pauses rates and rates peak, we think there is a case for our outrageous prediction of gold hitting $3,000 coming true.
  
• Copper trades up 0.5% to $4.25, its highest level since June last year, continuing its 32% rally off its low on expectations that China will increase buying after the Luna New Year holiday. Plus there are also disruptions on copper output in Peru, which could impact 2% of global copper output. So given inventory levels are already lower and demand expectations are picking up, copper prices are underpinned.
• Gas and oil prices are also higher too ahead of the EU embargo on Russian products which starts on February 5th. Oil (WTI) is up 1.3% to $82.64, at this level since early November, after two weeks of gains. Refinery demand is supporting prices.

• In the S&P500(US500.I) tech companies, which make up 26% of the market, are expected to report a quarterly profit drop of 9.2% on average, according to Bloomberg. This could be the biggest tech profit drop since 2016. Forward 12-month earnings of 39% is also expected according to Bloomberg. The danger is that estimates are still too bullish, and markets will likely be disappointed, which would trigger a fall.
• Overall aggregate S&P500 earnings are expected to have grown 2.12% in the quarter and miners are expected to deliver the most growth, real estate with the least.
• So far, only 55 companies have reported in the S&P500 and earnings have fallen over 4% on average. So, the bear case is still a factor for some investors, especially in tech. More job cuts are expected with margins being squeezed. EV companies are also facing pressure with higher metal prices.
• On Tuesday Microsoft kicks off earning season. Defence giants Raytheon and Lockheed Martin report on Tuesday. Tesla reports Wednesday. On Thursday Intel and Mastercard report, and steel giant Nucor. On Friday Chevron. These could be industry proxies to watch with a major focus on their outlooks.
  

Key economic releases & central bank meetings this week to watch 

Monday 23 January

• China, Hong Kong, Taiwan, South Korea, Indonesia, Malaysia, Singapore Market Holiday
• Japan BOJ Meeting Minutes (Dec)

Tuesday 24 January

• China, Hong Kong, Taiwan South Korea, Malaysia, Singapore Market Holiday
• Australia Judo Bank Flash PMI, Manufacturing & Services
• Japan au Jibun Bank Flash Manufacturing PMI
• UK S&P Global/CIPS Flash PMI, Manufacturing & Services
• Germany S&P Global Flash PMI, Manufacturing & Services
• France S&P Global Flash PMI, Manufacturing & Services
• Eurozone S&P Global Flash PMI, Manufacturing & Services
• US S&P Global Flash PMI, Manufacturing & Services
• Thailand Customs-Based Trade Data (Dec)
• Germany GfK Consumer Sentiment (Feb)
• United Kingdom CBI Trends (Jan)

Wednesday 25 January

• China, Hong Kong, Taiwan Market Holiday
• New Zealand CPI (Q4)
• Australia Composite Leading Index (Dec
• Australia CPI (Q4)
• Japan Leading Indicator (Nov, revised)
• Singapore Consumer Price Index (Dec)
• United Kingdom PPI (Dec)
• Thailand 1-Day Repo Rate (25 Jan)
• Germany Ifo Business Climate New (Jan)
• Canada BoC Rate Decision (25 Jan)

Thursday 26 January

• Australia, China, Taiwan, India Market Holiday
• Japan BOJ Summary of Opinions (Jan)
• South Korea GDP (Q4)
• Japan Services PPI (Dec)
• Philippines GDP (Q4)
• Singapore Manufacturing Output (Dec)
• Norway Labour Force Survey (Dec)
• United Kingdom CBI Distributive Trades (Jan)
• Canada Business Barometer (Jan)
• United States Durable Goods (Dec)
• United States GDP (Q4, advance)
• United States Initial Jobless Claims
• United States New Home Sales (Dec)

Friday 27 January

• China, Taiwan Market Holiday
• Japan CPI, Overall Tokyo (Jan)
• Australia PPI (Q4)
• Australia Export and Import Prices (Q4)
• United States Personal Income and Consumption (Dec)
• United States Core PCE (Dec)
• United States UoM Sentiment (Jan, final)
• United States Pending Home Sales (Dec)