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What’s influencing markets this week: Fed minutes, earnings, and the reopening of Chinese equities

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What's influencing markets this week: Fed minutes, earnings, and the reopening of Chinese equities

 

The Presidents' Day holiday is observed on Monday, and U.S. stock markets will be closed. The release of more quarterly profits, particularly significant figures from Nvidia (NASDAQ:NVDA) and Walmart (NYSE:WMT), as well as the release of the Federal Reserve's January meeting minutes, are anticipated by traders.

1. The weekly earnings calendar is led by Nvidia and Walmart.

This week's quarterly results season is underway, with low-cost retailer Walmart and artificial intelligence darling Nvidia taking center stage. Over the majority of the past year, Nvidia's worth has increased due to growing interest in artificial intelligence. The California-based company recently surpassed Google parent Alphabet (NASDAQ:GOOGL) as the third-most valuable corporation in the U.S. stock market. It is widely considered to be one of the most significant manufacturers of the high-end graphics processors that power the emerging technology. Following Wednesday's closing bell, investors will certainly be eager to analyze any remarks made by Nvidia regarding the direction that AI demand is expected to take this year, in addition to the company's fourth-quarter results. On Tuesday, Walmart will be the focus of attention elsewhere. The massive retail chain may offer insight into the buying patterns of American customers who have been closely monitoring their finances amid rising interest rates and inflation. We'll be closely monitoring what Walmart has to say about these patterns going forward.

2. Upcoming economic releases are highlighted in Fed minutes

Following a flurry of groundbreaking data releases that have shifted some expectations for prospective Federal Reserve interest rate decreases, this week's U.S. economic schedule should be quieter. On Wednesday, the minutes from the U.S. central bank's January policy meeting will take front stage in the agenda. These minutes may offer new insight into how policymakers see the path of borrowing costs this year. The Federal Reserve held its rate at a record high of more than two decades last month, with Chair Jerome Powell emphasizing that before considering a rate cut, officials needed to see more proof that inflation was steadily declining back to their objective of 2%. Powell stated at the time that a March cut was not his "base case." Following a flurry of groundbreaking data releases that have shifted some expectations for prospective Federal Reserve interest rate decreases, this week's U.S. economic schedule should be quieter. On Wednesday, the minutes from the U.S. central bank's January policy meeting will take front stage in the agenda. These minutes may offer new insight into how policymakers see the path of borrowing costs this year. The Federal Reserve held its rate at a record high of more than two decades last month, with Chair Jerome Powell emphasizing that before considering a rate cut, officials needed to see more proof that inflation was steadily declining back to their objective of 2%. Powell stated at the time that a March cut was not his "base case."

3. Following the Lunar New Year vacation, Chinese markets reopen higher

As trading resumed following the Lunar New Year holiday, China's domestic stock markets saw gains on Monday. There were indications that consumer spending had increased during the week-long break, perhaps surpassing pre-COVID levels. The Shanghai Composite index increased 1.6%, although the blue-chip Shanghai Shenzhen CSI 300 index closed higher by 1.1%. Official data released over the weekend revealed that Chinese consumers spent more on travel, shopping, and dining out during the holiday than they did the year before, which significantly improved sentiment. The figures raised expectations that, following a three-year decline, Chinese consumer spending, a major contributor to economic development, was finally on the upswing.

4. Apple faces a 500 million euro sanction from the EU - FT

According to a Financial Times article, Apple (NASDAQ:AAPL) could face a fine of over 500 million euros from the European Union for violating the bloc's music streaming regulations. The fine, which results from an EU antitrust probe into whether the tech giant intentionally used its platform to promote its own services over its competitors, is scheduled to be disclosed next month, according to the daily, which cited five persons with knowledge of the situation. This would be Apple's first fine imposed by the EU. According to the FT, the investigation focused on whether Apple blocked apps from providing iPhone consumers with less expensive music subscription options outside of the company's App Store. The FT continued, "Brussels will declare Apple's actions unlawful and contrary to its single-market competition protection regulations." Both Apple and the EU Commission declined to comment to the Financial Times about the impending ruling.

5. Oil slips amid demand worries

Early on Monday in European trading, worries over a possible slowdown in demand caused oil prices to decline. By 04:08 ET (09:08 GMT), West Texas Intermediate crude futures lost 1.0% to $77.68 a barrel, while Brent oil futures expiring in April declined 1.0% to $82.62 a barrel. Monday's market shutdown in the United States is predicted to limit price volatility. The previous week saw both benchmarks close higher, but gains were capped by concerns about weak demand given the longer-term increases in U.S. interest rates and the ongoing pressure from inflation. In the biggest oil-consuming nation in the world, higher rates might hurt US economic growth. Additionally, the International Energy Agency issued a warning this week about a downturn in demand in 2024, coinciding with statistics indicating that the UK and Japan were going into recession.

Happy Trading and good luck!