Weekly markets TL;DR: Massive week ahead for stocks, crypto and forex

1 year ago 82

1. Economy

Eurozone growth grew 0.1%, unexpected compared to expectations of a 0.1% contraction
IMF stated UK the only leading economy likely to head into recession in 2023
These are positive data points but could affect the all-important Federal Reserve meeting in the US tomorrow
Wednesday also brings the first jobs report of 2023, the job openings number for December from the Labor Department.
25bps hike seems a certainty, but all ears will be trained to Jerome Powell’s speech regarding the path for remainder of 2023

S&P 500 is heading for its best January since 2019 despite pullback Monday
Busiest week of earnings to come, with 20% of the index reporting this week
Mcdonalds and General Motors are today, with tech giants Apple, Meta and Alphabet particularly key later in the week
Markets should see volatility tomorrow depending on severity of Powell’s speech regarding interest rate policy going forward

Crypto has been muted again this week, Bitcoin still holding around $23K
Such is the sector’s correlation with interest rates, Wednesday represents the biggest day for crypto so far this year
Big moves could well be in play, with a firmly hawkish tone from the Fed having the potential to nuke Bitcoin’s recent gains. The flipside is also true, with the rally bound to kick on if Powell strikes a softer tone than market anticipates
Not much news beyond that in crypto, with Bitcoin set for its best January since 2013 unless the Fed spoils things tomorrow

Gold continues to trade strongly, at all-time highs in many foreign currencies
Fed meeting Wednesday should influence its hopes of pushing towards the psychologically important $2,000 level
Real estate in the UK is wobbling, with home loan approvals dropping to 35,600, well below expectations 45,200 and the lowest since the depths of lockdown in May 2020
Forex markets have been relatively calm this past week, as traders ready themselves for the upcoming storm ahead of crucial rate announcements in the US (Wednesday), UK (Thursday) and eurozone (Thursday)

Between earnings season kicking into full gear, the Fed meeting Wednesday, employment numbers Friday, and ECB and Bank of England also meeting, this week is the most pivotal across markets in quite some time
Watershed moment for the economy as it represents the first Fed meeting in some time where there are realistic hopes for a tangible change in long-term plan
Could be particularly extreme moves in tech sector and crypto, with the big names of the former reporting earnings and crypto moving so hand-in-hand with interest rate expectations, but all sectors should see heightened moves