Investing.com -- Earnings season ramps up, big central banks kick off their first meetings of 2024 and PMI data is set to show how the global economy is faring at the start of the year. Here's what you need to know to start your week.
US data
While slowing inflation has fueled expectations for the Federal Reserve to start cutting rates this year some policymakers have pushed back on rate cut bets. A key US inflation reading on Thursday will be closely watched for fresh insights on the future path of interest rates.
December's personal consumption expenditures data comes after the price index increased 2.6% in the 12 months to November and monthly prices fell for the first time in more than three and a half years.
The government is to release data on fourth quarter GDP on Wednesday, which is expected to come in at 2.0% after a 4.9% increase in the prior quarter.
Fed officials will be observing the traditional blackout period ahead of their upcoming policy meeting on Jan. 30-31.
Earnings ramp up
Earnings season is ramping up with investors looking ahead to results from some big names including Netflix (NASDAQ:NFLX), which reports on Tuesday, followed by Tesla (NASDAQ:TSLA) on Wednesday, as well as 3M (NYSE:MMM) and Intel (NASDAQ:INTC).
The S&P 500 posted a record high close on Friday for the first time in two years, fueled by a rally in chipmakers and other big tech stocks but could lose momentum if earnings results over the next few weeks fail to justify relatively high valuations.
"This new record level of the S&P 500 is sustainable as long as earnings meet expectations," Steve Sosnick, Chief Strategist at Interactive Brokers told Reuters.
"If, on the other hand, we find out that the market has either gotten ahead of itself ... or we get guidance from some of these companies that doesn't match the bullish sentiment that's being priced into them, that can be a real risk.”
It’s also set to be a big week for European tech, with ASML (AS:ASML), Logitech (NASDAQ:LOGI) and SAP (NYSE:SAP) reporting, as well as luxury powerhouse LVMH (EPA:LVMH).
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Central bank meetings
The European Central Bank holds its first policy meeting of 2024 on Thursday against a background of rate cut speculation, with markets pricing in five rate cuts this year.
Some policymakers say markets are getting ahead of themselves and President Christine Lagarde has warned that pricing too many cuts would not help the bank fight inflation.
The Bank of Japan is to conclude its latest policy meeting on Tuesday with markets expecting no change but with investors on the lookout for any indications on a possible exit from negative interest rates later in the year.
Meanwhile, the Bank of Canada is widely expected to keep interest rates on hold at 5% on Wednesday for what would be a fourth straight meeting.
PMIs
Investors are betting heavily on a so-called soft landing for the global economy, along with rate cuts later this year.
Wednesday’s flash Purchasing Managers' Index readings for the Eurozone, UK and US will give a sense of how business activity, in contraction territory across much of the world, has held up at the start of the year.
New orders and hiring intentions will come under scrutiny as they are two of the more forward-looking components. New orders have trends lower everywhere, often a sign of firms preparing for tough times ahead - at odds with the rosy outlook in financial markets.
Oil prices
Oil prices settled slightly lower on Friday but recorded a weekly gain as Middle East tensions and disruptions to oil output offset concerns about the Chinese and global economies.
For the week, Brent gained about 0.5% while U.S. crude rose over 1%.
The International Energy Agency last week raised its 2024 global demand forecast, but its projection is half that of producer group OPEC. The Paris-based agency also said that - barring significant disruptions to flows - the market looked reasonably well supplied in 2024.
"The forecast for global oil demand growth remains unclear, with stakeholders and research institutions providing widely differing projections," analyst Bjarne Schieldrop of SEB told Reuters.
--Reuters contributed to this report