Global Markets Outlook Ahead of U.S. Inauguration Day

Global markets are expected to face volatility as the U.S. inauguration day approaches on January 20, highlighted by significant economic data releases from the UK, US, and China, coupled with earnings reports from Wall Street and European IPOs.

1. Stagflation Nation

Britain’s economy is stagnating, with inflation at an eight-month high, complicating the Bank of England’s decisions. The rising yields of British 30-year bonds and a sinking pound challenge finance minister Rachel Reeves, who must navigate potential spending cuts amid public sector pay rises and tax increases.

2. Inflation Ramifications

U.S. inflation data will be critical for Treasury yields and Fed rate cut expectations. The December CPI, projected to rise by 0.3%, could influence market dynamics. A significant inflation number might increase yields amidst already high growth projections.

3. The Art of Trade War

China is set to report achieving its 5% growth target for 2024, triggered by recently implemented government stimulus. However, Donald Trump’s return to power could spark trade tensions, including potential 60% tariffs on Chinese goods, pressuring the yuan against the U.S. dollar.

4. Banking on Earnings

U.S. banks are expected to report strong earnings driven by heightened investment banking fees and trading income. Major banks including JPMorgan and Wells Fargo will report this week, providing insight into net interest income amid changing economic conditions.

5. Gearing Up for a Debut

European markets are bracing for new IPOs, with companies like HBX Group and Stada planning public offerings. Analysts predict a better outlook for European stocks, despite mixed results in 2023 relative to previous years.

Compiled by industry experts, ongoing updates on economic trends are essential as the financial landscape shifts.