LONDON (Reuters) – For traders, it’s a case of which way to look next with their screens flooded by headlines from tariffs and shaky Middle East ceasefire deals, to Russia and Ukraine.
There’s also a G20 meeting, Asia-Pacific central bank meetings and WalMart earnings in the mix.
Here’s the low-down on the week ahead in markets from Rae Wee in Singapore, Lewis Krauskopf in New York and David Milliken, Amanda Cooper and Marc Jones in London.
1/ WAR AND PEACE
The fate of two of the world’s worst conflicts are suddenly extremely live, thanks to Donald Trump’s interventions.
Saturday could be make-or-break for the fragile 43-day-old ceasefire between Israel and Hamas – a deal both sides accuse the other of violating, and rocked by Trump’s shock plan to clear out Gaza for a “Riviera of the Middle East”.
The all-crucial truce depends on whether Hamas releases the next group of Israeli hostages on schedule and Jerusalem – and Trump – are satisfied.
Then there’s the Ukraine-Russia war. Trump has been busy there too, laying the ground for its likely endgame in lengthy talks with Russia’s Vladimir Putin and Ukraine’s Volodymyr Zelenskiy.
Europe’s markets have rallied on peace hopes. As the third anniversary of Russia’s invasion nears, Moscow now controls a fifth of Ukraine.
2/ GOLD, YOU’RE INDESTRUCTIBLE
There seems to be little stopping gold’s surge.
A classic “inverse” relationship with the dollar, where the gold price drops when the U.S. currency strengthens, appears to be over.
It’s not just a matter of speculators deciding that gold is the next new thing. Much of the demand stems from concern that Trump’s “America first” policies could upend global trade, financial flows and geopolitics. Those themes might be apparent at the Feb 20-21 G20 meeting, a gathering U.S. Secretary of State Marco Rubio will miss.
Central banks are buying gold, partly to diversify reserves to include fewer dollars. Bullion traders are funnelling gold into New York vaults to minimise the risk of Trump slapping tariffs on precious metals.
Gold has roared to around $3,000, up over 10% since Trump’s election win. Next stop: $4,000?
3/ CONSUMER REPORT
Walmart’s quarterly report on Thursday should shed light on the health of the U.S. consumer as Wall Street frets about strong inflation.
The retailing giant’s results could highlight the impact of inflation on shopping behaviour and offer early insight into the potential fallout of Trump’ tariffs.
Consumer sentiment dropped in February to a seven-month low, a recent survey showed, while inflation expectations rocketed. U.S. consumer prices increased by the most in nearly 1-1/2 years in January, latest data shows.
No wonder U.S. rate cut bets are being dialled back.
Other U.S. retailers reporting in coming weeks, include Home Depot, TJX Cos and Target.
Overall, S&P 500 companies are set to have increased Q4 earnings by 15.1% from a year earlier, against expectations of a 9.6% increase as of Jan 1, according to LSEG IBES.
4/ EASING PARTY
It’s a central bank packed week in Asia-Pacific with rate decisions in Australia, New Zealand, and Indonesia.
The Reserve Bank of Australia is widely tipped to cut rates on Tuesday, though economists still expect some hawkishness given the strength in the labour market.
The Reserve Bank of New Zealand (RBNZ) is tipped to ease by half a percentage point, after lowering rates by a whopping 125 basis points already. The question now is how low the RBNZ can go given the gloomy economic reality?
Over in Indonesia, it’s trickier. After a surprise rate cut last month, economists expect Bank Indonesia to remain on hold, even as recent inflation and growth data underscore the case for more easing.
A weakening rupiah is keeping its hands tied.
5/ INFLATION REFLATION?
The Bank of England may soon be back to writing public letters explaining why it is missing its inflation target, just days after cutting rates to 4.5%.
Some economists think data on Wednesday will show inflation rose as high as 3.2% in January from 2.5% in December, taking it more than a percentage point above its 2% target and requiring Governor Andrew Bailey to write a letter of explanation to finance minister Rachel Reeves after March’s rate meeting.
The BoE estimates inflation was only 2.8% in January, but is on track to hit 3.7% by Q3 due to one-off factors that could push up regulated energy prices, water bills, bus fares and private-school fees.
Tuesday’s Q4 labour market data is also in focus. BoE Chief Economist Huw Pill described recent 6% private-sector pay growth as “a little bit aberrant” and said companies’ forecasts of 3.7% wage rises for 2025 were still too high for comfort.
(Graphics by Pasit Kongkunakornkul, Kripa Jayaram, Sumanta Sen, Amanda Cooper,and Prinz Magtulis; Compiled by Dhara Ranasinghe; Editing by Christina Fincher)
Comments