Hi, I’m Jeff Kleintop, and this week holds rate decisions by the Federal Reserve, European Central Bank, and Bank of England; the U.S. jobs report; and Big Tech earnings. Here’s 90 seconds on what you need to know for the week ahead. The Bank of Canada has been leading the Fed’s actions by one meeting over the past year and stepped down to a 25-basis-point rate hike from 50 basis points in December, signaling a similar move from the Fed this week.
But the Bank of Canada also said they were done—we probably won’t hear that from the Fed this week. The market is split on whether the Bank of England also steps down to 25 basis points or hikes by another 50 basis points. But there's little debate over the likely action by the ECB, with the market expecting another 50 basis points this week, followed by another 50 basis points in March. The euro is up sharply against the dollar since October when it had briefly fallen below parity. Potentially impacting central bankers’ outlook for inflation and growth, China's market re-opens after the Lunar New Year break, which saw the biggest surge in domestic air travel in China ever, exceeding pre-pandemic levels as Chinese consumers emerged to spend pent-up savings.
We also get the U.S. jobs report on Friday, with growth of 188,000 net new jobs expected, but that's the fewest since December of 2020. Now, the U.S. economy grew faster than expected last quarter, in the last quarter of 2022. But the mixed GDP report also showed consumer spending that was slower than forecast, suggesting that the burden of rising prices and higher borrowing costs is putting pressure on demand.
Around 25% of S&P 500® companies have reported so far. But this is the peak week for earnings with Big Tech, including Apple, Alphabet and Meta platforms, expected to offer details on their outlook for profits after recently announcing layoffs that slashed more than 52,000 jobs. Intel shares slumped on Friday on a dire forecast, fueling worries over the outlook for the rest of the tech hardware industry.
Thanks for watching.
