Look ahead: US CPI; Tesco; Marks & Spencer
US Fed rate cut expectations will swing back into view as investors await the latest CPI reading.
Inflation will also be a big theme in the UK retail space, with Tesco and Marks & Spencer updating investors on holiday trading. Both report after Sainsbury’s Christmas-related fare performed well, but demand for its general merchandise was weak.
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Australian trade balance numbers
The trade balance numbers for Australia in November are expected to show that they had a surplus of $7.5 billion Australian dollars. This means that the value of their exports was higher than the value of their imports. This is an increase from the previous month, where the surplus was just over $7 billion.
Awaiting US CPI figure
In the US, people are eagerly waiting for the CPI figure for December. This number represents the rate of inflation and is expected to be 3.2% compared to the previous year. This would be a slight increase from the last four months. However, it is also predicted to slow down in December to 3.8%. Another important number to keep an eye on in the US is the initial jobless claims. This indicates the number of people who have recently filed for unemployment benefits and can give us insight into the state of the job market.
The value of the US dollar has been connected to the possibility of a rate cut in March. Right now, the market is estimating a 64% chance of a 25 basis point cut. This is lower than the end of 2023 when it was around 86%. The weakening of the US dollar against other currencies is believed to be a result of the Federal Reserve's change in direction and Jerome Powell's suggestion that interest rates may go down.
Retail sector performance
In the retail sector, Tesco, the well-known grocery store, will be sharing their Q3 and Christmas numbers. Their competitor, Sainsbury's, had a successful Christmas, especially in their food department, which made up for a decline in other areas. Overall, UK grocers have done well in terms of food sales during the holiday season, but they may face challenges with other merchandise. Another store to keep an eye on is Marks & Spencer, known for their strong performance during Christmas. However, experts are unsure if they can keep up the momentum throughout the rest of the year.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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