The Dow Jones Index (US30) gained 0.08% (+1.61% for the week) at the conclusion of the stock market on Friday, while the S&P 500 (US500) gained 0.25% (+2.32% for the week). The NASDAQ Technology Index (US100) rose 0.95% on Friday (+4.03% for the week).

According to the most recent inflation statistics, the trend of core commodity prices and rate-sensitive components has improved. The Fed’s preferred gauge of Core PCE inflation declined from 4.7% to 4.4%, adding to the feeling that interest rates are reaching their highs. Policymakers’ attention is now focused on rebalancing the labour market and taking all necessary steps to bring inflation back to goal. Will the Fed be able to perform a “soft landing” on the economy, and how likely is this scenario? The data suggest a better inflation picture, an orderly labour market rebalancing, and a relatively strong consumer, all of which now support the case for a “soft landing” rather than a “hard landing.”

This week is a busy one for big company earnings, therefore market volatility will skyrocket. The following companies are scheduled to release earnings: Alphabet (GOOGL), Inc. (AMZN), Apple Inc. (AAPL), Exxon Mobil Corp. (XOM), Caterpillar Inc. (CAT), Advanced Micro Devices Inc. (AMD), Meta Platforms Inc. (META), and Alibaba Group Holdings (BABA).

On Friday, European stock markets were mainly up. The Spanish IBEX 35 (ES35) climbed by 0.27% (+1.49% for the week), the German DAX (DE30) increased by 0.11% (+0.48% for the week), the French CAC 40 (FR40) added 0.02% (+1.17% for the week), and the British FTSE 100 (UK100) increased by 0.05% (-0.07% for the week).

This week, the ECB will convene a crucial monetary policy meeting. According to experts, the probability that the ECB will increase the rate by 0.5% has already been factored into the market. The rate, which is currently 2.5 percent, is predicted to reach its peak in May 2023 at 3.25 to 3.5%. Then, according to experts, there will be a respite until late 2023 before a series of quarter-point cuts that will start in June 2024 are brought on by the declining economy. Two-thirds of respondents still predict a shallow recession in the area, despite the fact that the economy did better late last year as a result of lowering natural gas prices, government support to individuals and businesses, and diminishing supply problems.

This week also sees the Bank of England’s interest rate meeting, when a 0.5% increase is predicted. Due to this, borrowing costs will increase from 3.5% to 4.0%. A 4.25% high is anticipated for the rate in March 2023. As the effects of the sharp increase in energy prices from the previous year start to fade and the pressure on commodities and food starts to lessen more distinctly, the overall inflation rate should also start to drop at a faster rate starting in March. Early in 2024, a rate reduction is anticipated.

Chinese markets observed the Lunar New Year last week. According to economists, this will increase confidence in oil demand this week. Early data from China revealed a 120 percent rise in outbound travel during the first six days of the Lunar New Year in terms of tourism spending and box office receipts. Moving forward, this will help to increase market trust in the biggest oil importers in the world. Additionally, the OPEC+ meeting is this week. The advisory council of ministers is expected to suggest that output levels be left alone as the world’s demand shows potential signs of revival. Given current output and rising Chinese demand, this might serve as a foundation for additional price improvements in oil.

The majority of Asian markets rose last week. China’s FTSE China A50 (CHA50) did not trade all week due to Chinese New Year celebrations, Hong Kong’s Hang Seng (HK50) ended the week up by 5.46%, India’s NIFTY 50 (IND50) declined by 2.67%, and Australia’s S&P/ASX 200 (AU200) ended the week up by 0.79%. Japan’s Nikkei 225 (JP225) gained 1.87% over the week.

Lumber futures (+14.93%), coffee (+9.3%), sugar (+6.64%), and cocoa (+1.95%) exhibited the highest advances last week in the commodities market. The largest declines were seen in natural gas futures (-10.11%), heating oil (-8.07%), palladium (-6.8%), WTI oil (-2.77%), platinum (-2.75%), and gasoline (-2.38%).

Global Goldman Sachs strategists claim that a crucial component of Japan’s ultra-easy monetary policy, known as yield curve control (YCC), has come under increasing market criticism lately, raising the risk that the nation may finally completely eliminate it. The YCC was first introduced by the Bank of Japan in September 2016 to combat deflationary concerns and achieve its 2% inflation target. A path adjustment, however, is now feasible due to a number of circumstances, such as the possibility of inflation substantially above BOJ projections, the likelihood of a faster wage rise, the weakening performance of Japan’s government bond market, and the upcoming appointment of a new BOJ governor. The next monetary policy meeting (MPM) in March is when the Bank of Japan may begin further modifying the YCC.

COVID infections spiked in China in January, according to estimations from Beijing University. The number of serious cases should be less affected by the later waves due to the general population’s higher level of immunity afterwards. Chinese consumption will experience a genuine but modest revival. The possibility exists that the housing market will rebound more slowly than either domestic demand or consumption.

S&P 500 (F) (US500) +4,070.56  +10.13 (+0.25%)

Dow Jones (US30) 33,978.08 +28.67 (+0.084%)

DAX (DE40) 15,150.03 +17.18 (+0.11%)

FTSE 100 (UK100) 7,765.15 +4.04 (+0.052%)

USD Index 101.92 +0.08 (+0.08%)