This week, investors will be paying close attention to the latest minutes from the U.S. Federal Reserve (Fed) as they look for new perspectives that will shape the future of monetary policy in the country. Also the results of the chipmaker Nvidia (NVDA) will be an important sign of the artificial intelligence fever that has allowed to promote the rise in stocks in the U.S. market in recent times. Walmart (WMT) kicks off earnings reports from major U.S. retailers, markets in Asia’s largest economy resume activity, and PMI data will shed light on the strength of the economy around the world.
Here’s what you need to know what will happen during the week
Federal Reserve minutes
The economic calendar is very quiet this week thanks to a holiday, with Wednesday’s January meeting minutes from the Fed being the highlight of the week.
The nation’s monetary policymakers held borrowing costs unchanged at their meeting between the 30th and 31st of last month and signaled that a rate cut is unlikely for their next meeting scheduled for March.
Several Fed officials, including Chairman Jerome Powell, have stated that more time is needed to ensure that inflation is at sustainable levels to return to the central bank’s target level of 2%.
Currently, markets are estimating up to four rate cuts this year, starting from June, following a reduction in rate cut bets after recent strong Gross Domestic Product, inflation and employment data.
The economic calendar also includes data on new home sales and initial jobless claims.
Nvidia Results
Nvidia will show its results after the U.S. market closes next Wednesday, which could turn out to be a vital test of market confidence given the company’s volume and its place in the spotlight for the financial promise of artificial intelligence.
Shares of the company, known for its leading role in the artificial intelligence sector, have tripled throughout 2023 and have soared more than 50% since the beginning of this year, making it the third-largest U.S. company, trailing only Microsoft (MSFT) and Apple (AAPL).
Earnings generated by Nvidia have accounted for more than a quarter of the S&P 500 index’s rise so far in 2024.
Reports reflecting positivity regarding Nvidia’s company prospects could shake up the enthusiasm out there for artificial intelligence technology and also generate a market rally, although any disappointment could lead to major market fallout.
Retail sector results
Earnings season by major U.S. retailers kicks off this week and Walmart is expected to signal a cautious tone regarding its estimates for the current year when it shows its results before the market opens on Tuesday.
Walmart is believed to post a sales increase of about $11 billion in the Nov. 1-Jan. 31 quarter, up 4%, according to LSEG estimates.
Inflation continues to be a drag on many households on U.S. soil facing a high cost of living and consumer prices also rose more than estimated in January, dashing hopes of an immediate interest rate cut by the monetary watchdog.
With grocery prices well above pre-covid levels, more and more shoppers are gravitating to Walmart for its cheap food costs.
Thanks to its clout in the grocery sector, Walmart is expected to post sales of $645 billion in fiscal 2024, more than double some of its competitors.
Purchasing Managers’ Index (PMI)
Fears over the prospect of a global recession have eased as the U.S. economy, with its strong labor market, has remained resilient.
And even with China’s economy still failing to recover from the pandemic and the prospects of a downturn in Germany’s economy this year, the global PMI data due out Thursday should indicate that the outlook beyond the U.S. is not all bad.
However, in contraction territory, January PMI in the eurozone hit six-month highs and the bloc avoided a recession at the end of last year, the latest GDP data indicate. On Friday, 4Q GDP data will be released along with Germany and the ifo business confidence index.
Notably, business confidence showed signs of improvement in the previous month.
Emerging markets outside of China, such as India and the Middle East, are strong and the U.S. PMI is likely to hold in expansion territory after showing six-month highs last month.
China’s markets return after Lunar New Year holiday
China’s markets will return to action on Monday after the weeks-long Lunar New Year holiday, with investors waiting to see what the Chinese government does to recover its battered stock market.
Ahead of the festive period, authorities rushed to do all they could to stem losses in mainland stocks, which had fallen sharply to five-year lows.
Among the measures taken was the appointment of a new head of the country’s market regulator, known for its aggressive stance on containing risks.
Earlier on Sunday, China’s central bank decided to leave policy rates unchanged as planned, and uncertainty regarding the timing of the Fed’s rate cuts reduced the Chinese government’s room for maneuver regarding its monetary policy.
Meanwhile, the latest data on new home prices, to be released on Friday, will indicate the depth of the housing slump and its crisis in the Asian country.
