Investing.com | Jan 19, 2020 20:25
By Noreen Burke
Investing.com - It’s a busy week ahead with the first central bank meetings of the year taking place in the Euro Zone, Japan and Canada, which may help set the tone for 2020. U.S. President Donald Trump will be speaking at the World Economic Forum in Davos, Switzerland, where the International Monetary Fund is to present new forecasts for the global economy on Monday. In a week with a light economic calendar U.K. jobs and PMI data will likely garner the most attention amid growing expectations for a Bank of England rate cut. Investors will also tune into Netflix earnings on Tuesday. Here’s what you need to know to start your week.
Central bankers in the Euro Zone, Japan and Canada are not expected to make any changes in their first policy meetings of the year this week. However, the European Central Bank is launching the first review of its policy framework since 2003 amid questions over whether to adjust its inflation target which has not been reached for seven years.
Asset manager Pictet reckons at current prices, global stock markets have already priced over $2 trillion in central bank stimulus this year. But it expects that central banks will provide less than that, disappointing investors. What policymakers indicate this week could well set the tone for equity markets, which have resumed scaling record highs.
In the U.S., the Federal Reserve is in blackout mode ahead of its first rate-setting meeting of 2020.
Now that Trump has reached an interim agreement with China on trade it is likely just a matter of time before he turns his wrath on Europe. On Tuesday, he will get the opportunity to air his views on the U.S. economy and trade, speaking at the Davos World Economic Forum.
The U.S. president has already griped at having to "pay for our money" in a swipe at the Euro Zone's negative interest rates. He also blames the "too high" dollar for the huge U.S. current account deficit. The prospect of a currency war may not be too far-fetched, especially in an election year. The U.S. Treasury already lists Switzerland, Germany, Italy and Ireland as suspected currency "manipulators" - all have trade surpluses with the United States.
Netflix (NASDAQ:NFLX) is to report its fourth quarter earnings results after the close of trade on Tuesday, the first of the FAANG stocks to do so. Investors will be tuning in to see how the streaming giant is coping with a wave of competition led by another entertainment heavyweight Walt Disney (NYSE:DIS).
Investing.com analysts are expecting the streaming media company to have earned 52 cents per share in the fourth quarter, an increase on the 30 cents per share it earned in the same quarter last year, according to FactSet.
Since its launch last April Disney+ looks like the most dangerous challenge yet to Netflix's dominance of an increasingly crowded video streaming market. Netflix shares are down about 8% since then, hit by worries over slowing subscriber growth and the costs of high-budget productions such as The Crown and The Irishman. Disney+, on the other hand, has risen 24%.
In a quiet week on the economic calendar, Friday brings flash PMIs for the Euro Zone, the U.K. and the U.S. While the euro zone figures will be scrutinized for further signs of the economic recovery, the U.K. PMIs coming on the back of Tuesday’s employment report will grab more attention, being the last major data release before the Bank of England's Jan. 30 meeting.
Poor figures, coming on the heels of a recent string of weak data could cement expectations for easing policy as soon as this month, but those expectations could be pared back if PMIs surprise to the upside. But a modestly positive reading may still not deter the bank from cutting rates immediately.
The IMF is to release its adjusted global economic forecast on Monday in Davos. On Friday IMF Managing Director Kristalina Georgieva said the interim trade deal between Washington and Beijing will reduce - but not eliminate - uncertainty that has acted as a drag on global growth.
The organization had previously estimated that global trade tensions would shave 0.8% off international economic growth.
Georgieva also said the IMF generally favored multilateral agreements and warned that bilateral agreements could have negative implications for global growth in the longer term.
--Reuters contributed to this report
Written By: Investing.com
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