The month of January promises to be full of pitfalls markets and next week from the 8th to the 12th he will give min 5 risks of instability and just as many reasons for uncertainty for investors.
There are several questions awaiting clearer – and perhaps comforting – answers from data, events and policy decisions of the major economic powers. Among the questions most relevant to traders and analysts are those concerninginflation – and its real path of cooling, which may affect the monetary policy of central banks regarding rates – and developments ongoing warsunpredictable in its political and commercial security implications.
The year 2024 began with a focus on Red seaobserved with fear of the effects of Middle East escalation on cargo ships, on the price of oilabout a potentially dramatic turn in the war between Israel and Hamas.
Maximum notice also for American and Chinese macro data, for cryptocurrencies and for the first news coming from US banks. There are at least 5 risks of triggering sudden movements in global stock markets that spread a pessimistic climate.
1. Will prices skyrocket? The Red Sea in the spotlight
The world trade finds himself face to face with a new shock that can cause i prices of key commodities and raw materials as strategic as oil. The reason Middle East news is familiar today is the chaos in the Red Sea.
Missile and drone attacks by the Yemeni Houthis in this strip of sea to demonstrate their support for the Palestinian Islamic group Hamas, which is fighting Israel in Gaza, have disrupted the shipping plans of major global companies.
According to data from Kuehne + Nagel, as of Wednesday, January 3, nearly 20% of the global container fleet — or 364 massive container ships capable of carrying just over 2.5 million full-size containers — rerouted due to the attacks.
The danger of a crisis is real, considering that the Suez Canal trade route is used by around a third of the world’s container ship cargo, and diverting ships to the southern tip of Africa is expected to cost up to $1 million extra in fuel each round. the route between Asia and Northern Europe.
The result could be Western retailers waiting longer for goods to arrive from China, resulting in shortages push prices up, say business analysts. The British Retail Consortium said rising costs could reverse the easing trend in food inflation.
They are more focused on the markets oil prices relatively mild, have so far shown limited concern about shipping in the Red Sea. Oil is facing a period of greater supply versus weak demand, also in anticipation of a slowing economy. This keeps black gold prices somewhat under control.
But investors will be watching transportation costs for signs that the fight against inflation is far from over.
2. Inflation in the US, how much is it falling?
The US inflation data of the month of December, revealed on Thursday, January 11, promises to be of great importance. What will you suggest to the Federal Reserve regarding interest rate policy?
U.S. stocks and bonds soared in late 2023 anticipation reduces the cost of money by the US central bank and this remains a dominant theme for stock markets, analysts and investors.
Gradually cooling inflation increased the likelihood that the Fed could start reducing borrowing costs as early as March. Signs that prices remained muted in December would likely support that view, although a steeper-than-expected decline could also fuel concerns that recent rate hikes are starting to weaken the economy.
Conversely, a report showing a renewed rise in inflation could raise concerns and show that markets have been too euphoric so far. Economists polled by Reuters expect the report to show a month-on-month rise in consumer prices of 0.2%, compared with +0.1% in November.
3. Banking giants in the quarterly test
American banking giants start profit with JPMorgan Chase, American bank AND Citigroupwhich will announce results for the fourth quarter and for the full year on January 12.
Major lenders earned higher interest income in 2023 as the Fed raised rates.
Consumers are also in the spotlight. Household finances have largely remained solid since the pandemic, but some customers, especially those on low incomes, are falling behind in larger numbers.
Meantime, commercial real estate will continue to be an obstacle. Banks set aside money last year to cover distressed loans in the sector. As many employees continue to work remotely or in hybrid ways, office owners who have borrowed money to finance their buildings are likely to face additional challenges.
4. Inflation in Asia, what symptoms?
Not only the US, butAsia waiting macro inflation data which can provide a turnaround in economic and financial forecasts.
Policymakers in Australia, China and Japan are expecting new results on consumer prices to influence decision-making in 2024, a key year for their economies.
The Reserve Bank of Australia, which is expected to decide to cut rates later this year, could find relief if inflation slows in November.
Conversely, a recovery in consumer prices in Tokyo, a leading indicator of inflation trends nationwide, could encourage those betting on a change in policy from the Bank of Japan (BOJ) (the only one that is still accommodative). These expectations sent the yen up 5% against the dollar in December.
Achieve 2% inflation target “sustainably” is a prerequisite for BOJ officials to end negative interest rates.
in Chinadata from Friday 12 January will provide further clarity on whether deflationary pressures will continue to rise in the world’s second largest economy.
5. Bitcoin, rally or decline?
bitcoin kicked off the new year by closing 2023 with strong gains after investors bet on US regulators’ spot bitcoin funds (possible approval>article 147244) traded on the stock exchange.
The largest crypto token has surpassed $45,000 for the first time since April 2022, and is betting that such applications will soon receive approval from the Securities and Exchange Commission.
Market participants say the SEC’s decision could be imminent and could lead to a new ruling a wave of capital towards cryptocurrencies. Such hopes helped push Bitcoin to higher annual gains than in 2023 155%.
Still, the ever-volatile king of digital currencies has already reduced its gains in 2024. According to some analysts, the question remains how much demand there will be for any Bitcoin ETF and whether approval is already a given.