Profit from technology companies, Fed rates, China Evergrande, volatile oil and Copom meeting are among the topics
North American stock futures fluctuated on Monday (Jan 29, 2024), with markets preparing for a busy week of big profits and announcements of Central Bank decisions.
Apple, Amazon and Microsoft are among the tech giants expected to report earnings this week, while the Fed (Federal Reserve) will reveal his latest policy decision and make comments that could help determine the path forward for interest rates.
China Evergrande is ordered to liquidate, beginning a new and possibly long chapter for the highly indebted real estate developer. In Brazil, monetary policy is in focus this week.
1. Big Name Profits Ahead
A parade of high-profile and potentially market-moving results is expected to be released by a number of companies this week, including many of the so-called “Magnificent Seven” stocks that drove the stock's recent rise.
On Tuesday (Jan 30), Microsoft will report after the bell, just days after the tech giant's market capitalization surpassed $3 trillion.
Alphabet (NASDAQ:GOOGL), parent company of Google, which, like Microsoft (NASDAQ:MSFT), has benefited from a wave of excitement around artificial intelligence, will also reveal its latest figures.
On Wednesday (January 31), semiconductor manufacturer Qualcomm (NASDAQ:QCOM) will be in attendance, with investors keeping an eye on the San Diego-based group's vision for the next year for chip manufacturing.
Quarterly numbers are also expected to be released by Boeing (NYSE:BA), the embattled planemaker that came under new scrutiny after a dangerous mid-flight explosion on one of its 737 Max 9 models earlier this month, as well as by Novo Nordisk (NYSE:NVO), the Danish drug maker behind the popular weight loss drug Wegovy.
More technology companies are expected to enter the spotlight on Thursday (Feb 1), including Apple (NASDAQ:AAPL), iPhone maker, e-commerce giant Amazon (NASDAQ:AMZN) and Meta Platforms (NASDAQ:GOAL), owner of Facebook.
US stock futures hovered around both sides of the flat line on Monday (Jan 29), as investors braced for a week of key corporate earnings and central bank decisions.
At 7:55 am (Brasília time), the contract Dow futures had fallen 0.08%, the S&P 500 futures was stable and the Nasdaq 100 futures had added 0.1%.
A solid start to the year for Wall Street's major averages will likely face close scrutiny in the coming days. Investors will be crunching numbers from some of the biggest U.S. companies and digesting influential comments from the Federal Reserve, which could help clarify the outlook for the broader economy.
O S&P 500 fell 0.1% on Friday (Jan 26), leaving the benchmark index close to all-time highs, a move that reflects market hopes that inflation may be cooling without a collapse in growth – a scenario commonly referred to as “soft landing”.
The high-tech index Nasdaq Composite also fell 0.4% to end the previous trading week, while the 30-stock index Dow Jones Industrial Average gained 0.2%.
2. Fed decision in focus
Markets will also be keeping an eye on the Federal Reserve as the world's most influential central bank holds its final 2-day policy meeting.
Fed officials are expected to keep interest rates at more than 2-decade highs after Wednesday's meeting, with extra evidence in any comments on the outlook for near-term borrowing costs.
In December, the Fed signaled it could cut rates 6 times this year, fueling hopes of a cut as early as March.
However, several policymakers have moved to temper these expectations, indicating that concerns remain that a rapid easing of financial conditions could reignite the cooling of inflationary pressures.
A stronger-than-expected advance estimate of US Q4 growth last week also reinforced the argument that the Fed should hold off on cutting rates anytime soon.
Meanwhile, economists expect the January payroll on Friday (Feb 2) to show the continued resilience of the US labor market – although the Fed cannot take that data into account. specific in its latest projections.
How the Fed views price gains and the evolution of economic activity in 2024 will likely influence bets on the timing of the first cut. According to the Fed Rate Monitoring Tool from Investing.com, there is an almost 50% chance that the bank will make the cut in May.
3. China Evergrande
China Evergrande (HK:3333) was ordered to be liquidated by a Hong Kong court after the world's most indebted property developer failed to secure a restructuring deal with its creditors.
The group, which has more than $300 billion in total liabilities, has been trying to secure the deal for more than 2 years, following bond payments and a series of court hearings.
But judge Linda Chan appointed, on Monday (29 January), the management consultancy Alvarez & Marsal to liquidate Evergrande, arguing that the measure will provide some security to creditors. “It’s time for the court to say enough is enough”Chan said at the morning court session, Reuters reported.
Evergrande chief executive Siu Shawn told Chinese media that the decision will not affect the operations of its onshore and offshore units. However, analysts noted that the liquidation process could be complicated and time-consuming, as well as hurting already pessimistic sentiment regarding the state of China's property market.
Evergrande shares (OTC:EGRNY) fell just under 21% following the announcement.
4. Volatile oil
Oil prices were unstable on Monday (Jan 29), as investors worried about increasing supply disruptions in the Middle East following a drone attack on US forces in Jordan over the weekend.
At 7:56 am, the futures contract US oil traded 0.04% lower at US$77.98 per barrel, while the Brent fell 0.06% to US$82.90 per barrel. Both contracts had risen earlier in the day.
The attack, which according to US President Joe Biden, was carried out by Iranian-backed militants, resulted in the deaths of 3 American soldiers. It was the first deadly attack on US forces since the start of the war between Israel and Hamas.
Iran has denied involvement in the attack, but it raises concerns about a more direct confrontation between the 2 countries, which could result in disruptions to regional energy supplies in the oil-rich Middle East.
5. Copom meeting this week
The Copom (Monetary Policy Committee) of the Central Bank begins its 2-day meeting tomorrow to define the level of the basic interest rate for the Brazilian economy, the Selic. The consensus expectation is for a new cut of half a point, taking interest rates to 11.25%.
“The committee should maintain plurality (next meetings), highlighting at the same time fiscal uncertainty and the intensification of geopolitical risks to justify maintaining the pace”hopes Bank of America (NYSE:BAC) (BofA).
According to BofA, attention needs to be paid to signs coming from new advisors Paulo Picchetti and Rodrigo Alves. “Monetary policy remains contractionary (even with a cut to 11.25%, ex-ante real interest rates are still close to 7.5%) and far from the 4.5% that the Central Bank understands as neutral”adds BofA.
At 7:55 am (Brasília time), the ETF EWZ (NYSE:EWZ) rose 0.30% in the pre-market.
With information from Investing Brazil.
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