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Record Highs Or Reality Check For Markets?

By Spreadex (Connor Campbell)Market OverviewJan 10, 2021 05:49
Record Highs Or Reality Check For Markets?
By Spreadex (Connor Campbell)   |  Jan 10, 2021 05:49
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After an intense start to the New Year, how will the markets settle in the 2nd week of January?

Though it wasn’t without drama, the Dow Jones got what it wanted from the first trading week of 2021: a Democrat-controlled Senate and a string of record highs. It even held up well enough in the face of a woeful nonfarm jobs report, the first negative reading since the dark days of last spring.

In a way, this week might be more challenging for the Dow, precisely because it lacks those obstacles. A relatively clear deck when it comes to (predictable) macro-news means if may be in the position of defending its recent peak, rather than riding a wave of headline-led positive sentiment towards fresh highs. A period of quite reflection could cause investors to cast their eyes over the latest covid-19 headlines – the last thing the Dow et al. would want.

As for data, the JOLTS job opening number is out on Tuesday, followed by inflation on Wednesday, and import prices and jobless claims on Thursday. The latter also has an appearance from Fed chair Jerome Powell at a Princeton webinar, an event that could be mined for hints as to the central bank’s plans for 2021 now that the Democrats have taken the Senate, the House and the Oval Office.

Friday is then the big one, with PPI, Empire State manufacturing index, capacity rate utilization, industrial production and consumer sentiment readings. The highlight, however, are the retail sales figures for December – investors will be very keen to see not only how sizeable Christmas spending was, but how it did in light of the month’s squeeze on employment.

Another factor to consider is earnings season, which starts to pick up in the latter half of the week. BlackRock (NYSE:BLK) and Delta Airlines (NYSE:DAL) report on Thursday, while Friday has a financial-blitz, with figures from JP Morgan (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC).

A record-breaking open to 2021 ended with a bit of a whimper for the FTSE. It will be looking to get its momentum back this week, though where any such propulsion will come from is currently unclear.

Like in the US, the FTSE is potentially in danger of succumbing to covid-19 headlines in a quieter week, especially considering the super-charged growth seen in the first few sessions of the year, and Sadiq Khan’s declaration of an emergency in the capital.

Appearances from Monetary Policy Committee members Silvana Tenreyro and Ben Broadbent could be illustrative as regards to the Bank of England’s New Year plans on Monday and Tuesday respectively, but don’t look like the kind of events to really move the needle.

In terms of the economic calendar, it’s back-loaded, with the monthly GDP figure for November joined on Friday by the construction output, goods trade balance, and industrial and manufacturing production readings.

Over on the corporate side of things it is likely to be a mixture of Christmas misery and magic. JD Sports (LON:JD) and lockdown-favourite Games Workshop (LON:GAW) are up on Tuesday, followed on Wednesday by Just Eat (LON:JE), Persimmon (LON:PSN) and Sainsbury’s (LON:SBRY), and on Thursday by Hays (LON:HAYS), Dunelm (LON:DNLM), Whitbread (LON:WTB) and Tesco (LON:TSCO).

There is a more even spread of data in the Eurozone than the UK, with Sentix investor confidence numbers on Monday, industrial production on Wednesday, the latest ECB meeting minutes on Thursday and the French inflation reading on Friday.

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Record Highs Or Reality Check For Markets?

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Record Highs Or Reality Check For Markets?

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