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Top 5 Things to Watch in Markets in the Week Ahead

Economy Feb 20, 2022 06:43AM ET
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© Reuters

By Noreen Burke

Investing.com -- Rising tensions between Moscow and the West over Ukraine and speculation about monetary policy look set to keep investors on edge in the coming holiday-shortened week. Concerns over elevated inflation will also remain to the fore with the release of a key U.S. inflation metric along with a string of earnings results from major U.S. retailers. Oil prices will remain in focus, while the U.K. and the Eurozone are to release PMI data that may show the economic impact of easing Covid-19 restrictions. Here's what you need to know to start your week.

  1. Market turbulence

The U.S. market will be closed on Monday for the Presidents' Day holiday, but investors are likely to be facing another choppy week as fears over a potential Russian invasion of Ukraine underpins demand for safe haven assets.

Ongoing uncertainty over the Federal Reserve’s next policy move is also likely to continue to weigh on equities.

The Fed has signaled that it will hike interest rates at its upcoming meeting in March to bring down inflation, which has surged past the central bank’s 2% target to hit its highest levels in four decades, but it has not indicated how aggressively it will act.

St. Louis Fed President James Bullard has called for aggressive steps to curb inflation, while New York Fed chief John Williams said Friday he sees little need for the central bank to go big at the start of its rate-hike cycle.

"This is a confused market, confused about Ukraine, confused about how aggressive the Fed is going to be, and pretty much ignoring very strong earnings results from the fourth quarter," Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York told Reuters.

  1. U.S. data

Amid speculation over the prospect of a half percentage point rate increase from the Fed in March Friday’s data on the personal consumption expenditures price index will be closely watched.

The PCE price index, rumored to be the Fed's favorite inflation measure is forecast to have risen 6% year-over-year in January, while the core reading, which excludes food and fuel prices, is expected to rise 5.2%.

The PCE data is released as part of the report on personal income and spending. Other economic data on Friday includes revised data on consumer sentiment, pending home sales numbers for January and a report on durable goods orders, also for January.

There will also be speeches from several Fed officials during the week, including Richmond Fed President Tom Barkin, San Francisco Fed President Mary Daly, Cleveland Fed President Loretta Mester and Fed Governor Christopher Waller.

  1. Retail earnings

After a strong rebound in January retail sales, consumers are back in focus and a string of earnings results from major retailers this week will be parsed for signs of how surging inflation is affecting spending. Despite the rebound in retail sales, consumer sentiment has dropped to a decade low in recent months leading to fears that the economic recovery could stall.

Home Depot (NYSE:HD), Lowe's (NYSE:LOW), Macy's (NYSE:M) and Foot Locker (NYSE:FL) are among those scheduled to report fourth quarter results during the week. Other companies reporting earnings include Anheuser Busch Inbev (NYSE:BUD), Alibaba (NYSE:BABA), Caesars Entertainment (NASDAQ:CZR), Krispy Kreme (NASDAQ:DNUT) and Beyond Meat (NASDAQ:BYND).

In addition to bottom lines, investors will be looking to see how companies are dealing with the supply chain crunch and their views on inflation.

  1. Oil prices

Oil prices could be set for another mixed week as energy traders weigh a potential supply disruption resulting from the Russia-Ukraine crisis against the prospect of increased Iranian oil exports.

Fears over possible supply disruptions from sanctions on top exporter Russia if it attacks Ukraine have supported prices, which have also been underpinned by a recovery in demand from the pandemic.

U.S. crude prices are hovering around $91 a barrel and last week reached their highest level since 2014, while the price for Brent, the global benchmark, is near seven-year highs.

Higher oil prices are contributing to soaring inflation, adding to concerns that the Fed will need to aggressively tighten monetary policy to curb consumer prices.

Investors will also have the chance to measure the effect of higher oil prices on energy companies’ earnings this week when Occidental Petroleum (NYSE:OXY), EOG Resources (NYSE:EOG), NRG Energy (NYSE:NRG), Chesapeake Energy (NYSE:CHK) and Coterra Energy (NYSE:CTRA) all report.

  1. PMI data

The U.K. and the Eurozone are to release PMI data for February on Monday that may show a boost to economic activity with governments removing more pandemic era restrictions. Germany’s Ifo business climate index on Tuesday will also be closely watched.

Positive signs of an economic recovery could encourage central banks to unwind post-pandemic stimulus fast.

The Bank of England is on track to raise rates again in March while European Central Bank policymakers are still debating whether rates will need to rise this year in order to curtail inflation.

BoE Governor Andrew Bailey along with several policymakers are due to appear before Parliament's Treasury Committee on Wednesday to answer questions on inflation and the economic outlook.

Meanwhile, several ECB officials are due to make appearances during the week, including Vice President Luis de Guindos and Executive Board member Isabel Schnabel.

--Reuters contributed to this report

Top 5 Things to Watch in Markets in the Week Ahead
 

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Comments (12)
Anthony Nguyen
Anthony Nguyen Feb 20, 2022 8:58PM ET
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buyden is clearly working for the rich. warmongering to scare people into selling while the rich is covering.
Stan Smith
Stan Smith Feb 20, 2022 11:37AM ET
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Here's something else to watch for:  Rick Rule: Banks Secret Plan To Crash The Stock Market, Seize Your Money (& Cause A Food Shortage?)
Jarod Butcher
Jarod Butcher Feb 20, 2022 11:37AM ET
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Hey stan are you a professional trader?
Julius Orode
Julius Orode Feb 20, 2022 11:37AM ET
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So what do I need to do to in regards to trading
Kaveh Sun
Kaveh Sun Feb 20, 2022 11:27AM ET
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This war monger goes on until the rich accumulate enough shares at cheap price. Run the market up then sell. Rinse and repeat.
Akbar Karimi
Akbar Karimi Feb 20, 2022 11:10AM ET
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Can’t believe US market is dumped just beacuse of Fake media and Russia’s un-predicted war. Which will not even gonna happen.
Stan Smith
Stan Smith Feb 20, 2022 11:10AM ET
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That' s because market dumping  not about fake media...that's a cover. Lots more going on behind the scenes with raging inflation, a crumbling economy and a devaluing dollar
Ludovick Thobias
Ludovick Thobias Feb 20, 2022 11:10AM ET
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These is a stupid ideology it's real seezing market i haven't trade for 2 days now the US market is very worst *******
Mohd Izhar Muslim
Mohd Izhar Muslim Feb 20, 2022 10:54AM ET
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Thanks for the article 👍
Amir Alvi
Amir Alvi Feb 20, 2022 10:15AM ET
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👍👍
shiv digital video
shiv digital video Feb 20, 2022 10:15AM ET
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CRUDE most neat 100 one week
Jose Cabreja
Jose Cabreja Feb 20, 2022 10:15AM ET
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$120
Bambino Tee
Bambino Tee Feb 20, 2022 10:14AM ET
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Most of these writers have no clue of what they talking about
Gershom Zvi
Gershom Zvi Feb 20, 2022 10:03AM ET
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Anyone can answer What thing drives more the oil price 1) uncertainty or 2) disaster itself ?
Michael Redden
Michael Redden Feb 20, 2022 9:53AM ET
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Trump had the east shook to do anything close to this. Like having a stern dad. The way he manhandled china had putin shaking. Hence he only invades on DEMs watch...
Gershom Zvi
Gershom Zvi Feb 20, 2022 9:53AM ET
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New Jazenevd Absolutely
Gershom Zvi
Gershom Zvi Feb 20, 2022 9:53AM ET
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New Jazenevd Almost everyone forgot Carter’s big failure with Iran He can stop completely the iranian drama but did not …
David Kunnas
David Kunnas Feb 20, 2022 9:53AM ET
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Its always frustrating when a weak handed governement puts diplomacy ahead of US national security. ie. Benghazi
 
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