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Week Ahead Preview: 25 January 2020

Fawad Razaqzada Fawad Razaqzada 22/01/2021
Week Ahead Preview: 25 January 2020 Week Ahead Preview: 25 January 2020
Week Ahead Preview: 25 January 2020 Fawad Razaqzada
In the weeks ahead, sentiment towards stocks will likely remain positive, especially in Europe. With a Brexit deal secured and COVID vaccines being rolled out (with relative success in the UK), investors are likely to look through the short-term economic risks arising from the current lockdowns. In fact, there was a bit of good news for a change as the number of people catching the virus fell in the UK, albeit from exceptionally high levels. The so-called R rate was estimated to be between 0.8 and 1 on Friday, meaning the outbreak is now shrinking if the official estimates are correct. But there is still a long way to go. Lockdowns are unlikely to end until deaths start falling and in any case until more people are vaccinated, especially in the high-risk category. This will probably keep the upside limited for risk assets.

3 factors to watch in the week ahead:
  • Corporate earnings – especially from tech giants
  • Macro data
  • Bond yields
Keep an eye on bond yields

There has been a subtle upwards shift in benchmark 10-year government bond yields since the start of the year. Specifically, it has been the European yields starting to catch up after yields in US, Australia and New Zealand had all started to perk up from around November.

yields
 
The rising yields in Europe suggest bond market investors are no longer expecting any further stimulus from the European Central Bank. This makes some sense as the ongoing vaccine rollout means the pandemic and lockdowns can, hopefully, be declared over at some point later this year. We have also secured a Brexit deal while a massive European Union fiscal package is forthcoming. The need for the ECB to continue offering as much support is thus diminishing. This should mean higher yields from here.
 
For investors, the key concern – for the lack of a better word – is that the ECB’s slower pace of purchases of government debt, potentially causing yields to rise further, may put upward pressure on the euro. This, in turn, could weigh on inflationary pressures and hurt Eurozone exports.  
However, to suggest bond yields will stage a sharp rally – or bond prices will sell-off sharply – is very premature. While yields can stabilise further, it is worth remembering that they sit near historically low levels and central banks will be keen to keep them low for a long time to come.
In other words, conditions remain ripe for equities to continue outperforming, especially if the rollout of vaccines, or removal of the lockdowns, happen faster than expected. For FX investors, the positive signals from the equity market will likely keep haven currencies depressed, allowing the likes of the euro and pound to following the commodity dollars higher.
 
Corporate earnings galore

There will be plenty of fourth quarter corporate earnings results to keep stock market investors busy in the week ahead. Among others, we will hear from big tech giants Microsoft, Apple and Tesla, as well consumer stocks, providing us invaluable insights about the health of consumer and business spending.

Here are the earnings highlights for the week ahead:
 
  • Tuesday: AMD, Microsoft, Starbucks, Johnson and Johnson and GE, among others
  • Wednesday: Apple, Tesla, Facebook, Boeing and Sina Corp
  • Thursday: Visa, Mastercard, McDonalds and American Airlines
  • Friday: Chevron and Caterpillar
 
Economic data highlights

While the earnings calendar is quite busy, there is not a lot on the agenda for macro investors. Still, there are a handful of macro pointers to keep a close eye on. Here are the highlights:
 
  • Monday: German ifo Business Climate
  • Tuesday: UK Claimant Count Change and Average Earnings Index
  • Wednesday: German GfK Consumer Climate and FOMC statement and press conference
  • Thursday: US Advance GDP (first estimate), unemployment claims and New Home Sales
  • Friday: Flash GDP estimates from France and Spain; German unemployment; US personal spending and income
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Meet our contributors
Mohammed Zidan
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Mohamed Zidan
Chief Market Strategist, Dubai

Mohamed Zidan is a chief market strategist in Dubai and CFA Level III candidate. He reports to London office and has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis. worked as FX Analyst, and Strategist in several different organizations and for various departments. He holds a bachelor’s degree from Cairo University in Egypt. Mohamed Zidan is a regular guest on several major TV networks such as; CNBC Arabia, Fran24 Arabic, Alarabiya , Dubai TV, Sama Dubai, Skynews Arabia, Saudi National News, and Egypt National news.

Zidan presents insight to the markets movements, holds open discussions and relays possibilities related to the world’s financial market and economies.

Mohamed Zidan has been invited as a guest speaker for several international seminars. Zidan provides daily and weekly outlook for the markets. His experience ranges from currencies, commodities, stocks and options. he applies a top-down, global macro approach combined with price action to generate trade ideas and anticipate the next move.

Victor Golovtchenko
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Victor Golovtchenko
Global Macro Analyst, Sofia

Victor Golovtchenko has been analysing and trading foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor at a major brokerage industry news outlet was followed with a breakthrough into the financial news space with the brand new TradeStar website.

As an affectionate macro-focused analyst, he has an integrated framework to look at financial markets as a whole, identifying gaps between currencies, stocks, bonds, and other asset classes to get a core complete picture of the macroeconomic environment.

Fawad Razaqzada
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Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Mohammed Zidan
Mohamed Zidan
He has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis.
Victor Golovtchenko
Victor Golovtchenko
Victor Golovtchenko has been trading on the foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor follows his role with TradeStar.
Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.

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Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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