Week in review: UK cheers, US doesn’t
US inflation data came in hotter than expected, partly explained by a strong consumer activity. In January, the US headline CPI was reported at 6.4% y/y (vs 6.2% forecast and down from 6.5%), while core figure stood at 5.6% y/y (vs 5.5% forecast and down from 5.7%). PPI data also came in strong at 0.7% m/m (vs 0.4% forecast and up from -0.2%). The upwards surprise from the US January’s inflation data can largely be attributed to the higher-than-expected growth in retail sales, which stood at 3.0% (vs 1.8% forecast and up from -1.1%). As potential recession remains a secondary concern for investors, the inflation data has produced a negative market momentum overall.
UK released a series of positive macroeconomic news, supporting a modest rally in FTSE 100. Firstly, the countrywide January’s inflation data surprised on the downside: the headline CPI was reported at 10.1% y/y (vs 10.3% forecast and down from 10.5%), while core stood at 5.8% y/y (vs 6.2% forecast and down from 6.3%). Importantly, January delivered the first deflation in monthly terms (-0.6% m/m) since the start of current inflationary cycle. On the activity side, it was labor market and retail data that cheered the market: UK’s monthly job gains came in higher than expected at 74,000 (a 6-month high), while retail sales contracted by a less than expected rate of -5.1% y/y (vs -5.5% forecast and up from -6.1%).
Week ahead: sizeable volatility in sight
Macroeconomics: The list of this week’s major macroeconomic releases includes Euro Area, US, and UK Services & Manufacturing PMIs on Monday, Germany’s inflation and FOMC minutes on Tuesday, Euro Area inflation and US GDP on Wednesday, and Germany’s GDP and US PCE price index on Friday.
Earnings: The list of this week’s major earnings releases includes BHP (BHP) on Monday, Walmart (WMT) and Home Depot (HD) on Tuesday, Nvidia (NVDA) and Baidu (BIDU) on Wednesday, Alibaba (BABA), Intuit (INTU), and Booking (BKNG) on Thursday, and Dell Technologies (DELL) on Friday.
