This week, the attention of domestic investors will focus on a series of macro data for December, which will be published on Monday. The market will learn about wages, employment, industrial production and retail sales, among others. In the coming week, central bank meetings will be important for investors; the ECB, China, Japan, Canada, Norway and Turkey will decide on interest rates.
A number of important data
“On Monday, we will be showered with a solid portion of national statistics: we will learn the December results of production in industry and construction, retail sales, wages and employment, as well as the January survey of the business climate in companies. On Wednesday, the picture will be complemented by data on unemployment and money supply and the Statistical Bulletin of the Central Statistical Office. Our forecasts in In the case of most variables, they are not far from the consensus (only in the construction sector we expect a significantly weaker reading than the market) and are consistent with the scenario of a continued moderate recovery in economic activity at the turn of the year,” Santander BP economists said in the report.
Monday data from the Central Statistical Office for December will allow for a more accurate estimate of the situation in the Polish economy in the fourth quarter and throughout 2023. According to the PAP Biznes consensus prepared in January, the market expects that Poland’s GDP last quarter it increased by 1.9%. y/y, and in the whole of 2023 by 0.5%.
The Senate will consider the draft budget
There will be a meeting of the Senate on Wednesday and Thursday, during which the upper house of parliament will discuss, among others: draft budget act for 2024. Last week, the Sejm adopted a draft that assumes that the budget deficit this year will not exceed PLN 184 billion.
“If the Senate efficiently adopts the budget bill without amendments, it will reach the president’s desk before the end of January, which will close the door to the president’s possible dissolution of parliament and early elections. Media reports and statements by President Andrzej Duda himself show that he may consider sending the budget bill before signing to the Constitutional Tribunal,” Santander BP economists point out in the report.
“In such a scenario, state finances will function based on a provisional budget in the form of a draft budget presented by the Council of Ministers,” they add.
The sales auction will be important for the debt market this week treasury bonds, which the Ministry of Finance will carry out on Tuesday. At the auction, the ministry will offer bonds with a total value of PLN 6-10 billion.
Decision on rates in the euro zone
The Governing Council of the European Central Bank will decide on the matter interest rates Thursday. However, the market does not expect any change in monetary policy parameters at the next meeting, especially since the signals from the ECB do not indicate any changes.
Last week in Davos, Switzerland, the head of the ECB, Christine Lagarde, announced in an interview for Bloomberg that there is a likelihood that the European Central Bank will reduce interest rates in the summer. In turn, in an interview with France 2 television, Lagarde indicated that the ECB will start cutting rates when it becomes sure that inflation is on track to achieving the target of 2%.
“We rule out any changes to key interest rates or other monetary policy tools in January. Moreover, we do not expect any significant changes in the statement after the ECB meeting or during President Lagarde’s press conference, and therefore no new signals for the markets. We believe that the door to interest rate cuts will be opened – although only verbally – at the March meeting,” Erste economists estimate.
In addition to the ECB, interest rates will also be decided by China (Monday), Japan (Tuesday), Canada (Wednesday), Norway and Turkey (Thursday) on interest rates in the starting week. Only in the case of Turkey, a change in interest rates is expected.
Data from the largest economies
In the coming days, investors’ attention will also focus on a number of macroeconomic data from the largest economies.
The key readings from the US will be preliminary GDP data for Q4 2023 and a report on Americans’ income and spending in December, including the Fed’s preferred measure of PCE inflation. The market will be closely watching the data for clues about the future path of US interest rates. The next meeting of the US Federal Reserve is scheduled for January 30-31.
Additionally, preliminary PMI readings for industry and services will be important, as they will show the sentiment among companies at the beginning of 2024.
The season of publishing financial results by the largest companies is gaining momentum on the markets. In the coming days, they plan to present their data, among others: easyJet, Netflix, Tesla, 3M, Associated British Foods, ASML, Logitech, SAP and LVMH.
The situation on the stock exchange
The S&P 500 index posted a record high close on Friday, driven by gains in chipmakers and other large technology stocks. However, the index could lose momentum if financial results released over the next few weeks do not justify relatively high valuations.
“The new record high of the S&P500 may be sustainable as long as earnings meet expectations,” said Steve Sosnick, chief strategist at Interactive Brokers, in an interview with Reuters.
Oil prices in focus
Oil prices and the situation in the Middle East also remain in the market’s focus. As Al-Jazeera reported on its website on Saturday, oil supplies from the Middle East to Europe have been reduced by almost half as a result of continuous attacks. Houthi rebels on trade routes in the Red Sea.
Last week, the International Energy Agency raised its global demand forecast for 2024, but its estimates are half the forecast of producers associated with the OPEC group. The agency also stated that – unless there are significant disruptions in flows – the market will be quite well supplied in 2024.
“Estimates of the growth in global oil demand remain unclear, with stakeholders and research institutions presenting very different forecasts,” noted SEB analyst Bjarne Schieldrop in an interview with Reuters.
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