Brexit

Week ahead: US bank earnings, Brexit vote redux

US earnings season is set to kick off with the country’s biggest banks handing in results for the latest quarter in one of the major highlights of the calendar this week

But outside the corporate realm, UK members of parliament’s second attempt to vote on prime minister Theresa May’s Brexit deal will be a closely-followed event on the eastern shores of the Atlantic.

Economy watchers, as well as keeping an eye on any further trade progress between the US and China, have US retail sales, eurozone inflation and Chinese trade as some of the more notable releases this week.

Bank earnings

Citigroup kicks off US bank reporting season on Monday, followed by JPMorgan and Wells Fargo on Tuesday. Bank of America and Goldman Sachs are slated for Wednesday, while Morgan Stanley reports the day after.

Rising short-term interest rates in 2018 beg the question whether the cost of deposits at major lenders will finally increase, and whether hints of weakness in the economy will prompt banks to boost provisions for bad loans. Investors will be watching to see what impact elevated volatility in financial markets had on investment banking operations.

Outside the banks, Netflix is set to report earnings on Thursday.

Another Brexit vote

On Tuesday, the UK House of Commons is set to have another crack at voting on Mrs May’s Brexit deal. In December, the prime minister delayed the first attempt at voting on her agreement, acknowledging at the time she would have been defeated by a “significant margin”.

Mrs May has struggled to win additional assurances from the EU that might make her proposal more palatable to her MPs. You can check out some of the key dates pertaining to the UK’s split from the EU here.

Economic releases

On the economic calendar, US retail sales are a probable highlight and is slated for Wednesday, notwithstanding any delays brought about by the government shutdown. Sales are forecast to have risen 0.3 per cent month-on-month in December. In the lead-up to Christmas, a number of retail executives predicted a solid holiday season, but updates from a number of big US retailers had been met with a mixed to negative reaction from investors.

Elsewhere, Chinese trade figures are out on Monday and will be closely watched amid the continued impasse between Beijing and Washington. US producer prices and the Empire manufacturing index are due on Tuesday. Eurozone inflation is out on Thursday, while Japan and Canada see those same data on Friday. Retail sales for the UK are out on Friday.

Fedspeak

A number of Federal Reserve policymakers will be speaking this week, giving additional opportunities for them to try and calm investors who were unnerved by the central bank’s forecast pace of monetary policy tightening this year.

The Fed raised rates in December, as expected, and dialled back its forecast for increases this year to two from three. But chairman Jay Powell’s comments in the immediate wake of that, that the bank would keep its plan to shrink its balance sheet on “autopilot” spurred a bout of financial market volatility in the lead-up to Christmas. Since then, reassurances from Mr Powell and others that they will adopt a wait-and-see approach towards raising rates further has supported a solid rally in the stock market.

Source

neallesh@yahoo.co.uk

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.