Following the Fed’s marginally hawkish shift last week, picking up the central bank mantle in the coming days are the Bank of England, Reserve Bank of Australia and the Reserve Bank of New Zealand.

Bank of England

 

Is the Bank of England mulling another interest rate hike sooner rather than later? While there is no expectation for a change in policy this week, there have been murmurings around the monetary policy committee having more leeway to raise rates faster than previously expected.

Fourth quarter growth, which defied expectations to remain robust, has some economists thinking the BoE will move to increase rates in the summer.

Meanwhile, the BoE itself is starting to think along more conventional lines as it focuses on a return to wage growth. And while inflation resulting for the depreciation in sterling is becoming less important, rising oil prices are pushing up input costs and may keep inflation at the top end of target in 2018. “The focus is increasingly on returning inflation sustainably to target over an appropriate horizon,” governor Mark Carney said last week. Ultimately, if oil prices keep the upwards pressure on inflation, the BoE’s hand could be forced.

The BoE is likely to remain on the fence but we could just see a slightly hawkish undertone that keeps sterling bulls interested. The announcement is due at midday on Thursday.

RBA, RBNZ

 

Ahead of the BoE, the Reserve Bank of Australia (RBA) is in action on Tuesday. No change is expected at this meeting after the latest inflation data was a little below expectations. 

The rally in the Australian dollar has already exerted a degree of financial tightening and this may prevent the RBA from moving as swiftly as predicted in 2018. As with a range of G10 currencies, the Aussie is at its strongest in more than three years against its US counterpart, and this has the market rowing back a touch on previous expectations for two rate hikes in 2018.

Meanwhile in New Zealand, we have similar pressures. New Zealand CPI came in at 1.6% in Q4 2017 versus 1.9% expected, which has dialled back expectations for a hike. Markets think the RBNZ probably will raise rates this year, but the softer inflation data has undoubtedly killed off the near-term expectations. The RBNZ announcement is slated for 20:00 on Wednesday (UK time).

Services PMIs

 

Service sector data is due Monday. Following the incredibly bullish manufacturing numbers, we may expect more ‘Euroboom’, while in Britain the numbers are especially important for the pound as services account for roughly 80% of output.

The last report jumped to 54.2 in December compared with a 53.8 reading in November. This was ahead of expectations and tallied with GDP figures that showed a more resilient performance by the UK economy in Q4. Business activity was up but new order growth slipped to a 16-month low, while input price inflation rose to its highest in three-months. As with the latest manufacturing PMI last week, there are signs that higher oil prices will keep inflation at the higher end of expectations in 2018, which could force the Bank of England’s hand.

 

Snap earnings

 

Fanfare counts for precious little and Snap is finding out that ‘buzz’ and ‘hype’ and ‘influence’ counts for absolutely nothing if can’t turn it into earnings. The net loss for the nine months ended September is more than $3bn – not even Tesla is burning cash this quick. IF it doesn’t turn that into significant increase in revenues and users soon, investors could give up hope.

Snap is coming off the back of a bad revenue miss – Q3 revenues came in at $207.9 million versus $236.9 million expected, while average revenue per user was $1.17 versus $1.30 expected.

Daily active users (DAU) - one of the most important metrics –grew from 153 million in Q3 2016 to 178 million in Q3 2017. Although a 17% year-over-year increase, this was also short of expectations.

Economic Calendar

(All times GMT)

Monday, 5 February

01:45 – China Caixin services PMI

09:00 – Eurozone final services PMI

09:30 – UK services PMI

15:00 – ISM non-manufacturing PMI

Tuesday, 6 February

00:01 – UK BRC retail sales monitor

00:30 – Australia retail sales, trade balance

03:30 – Reserve Bank of Australia cash rate and rate statement

07:00 – German factory orders

13:30 – Canada trade balance

15:00 – Canada Ivey PMI

15:00 – US Jolts job openings

21:45 – New Zealand employment change, unemployment rate

Wednesday, 7 February

07:00 – German industrial production

08:30 – UK Halifax house price index

09:00 – Italian retail sales

13:30 – Canada building permits

15:30 – US weekly crude oil inventories

20:00 – New Zealand interest rate decision, rate statement

21:00 – RBNZ press conference

Thursday, 8 February

00:01 – UK Rics house price balance

00:30 – Australia NAB quarterly business confidence

Tentative – China trade balance

09:00 – ECB economic bulletin

12:00 – Bank of England interest rate decision, monetary policy summary, inflation report

13:30 – Canada new housing price index, unemployment claims

Friday, 9 February

00:30 – RBA monetary policy statement

01:30 – China CPI & PPI inflation

07:45 – France industrial production

09:00 – Italian industrial production

09:30 – UK manufacturing production, goods trade balance

13:00 – UK NIESR GDP estimate

13:30 – Canada employment change, unemployment rate

Corporate Calendar

 

Monday, 5 February

Ryanair (RYA) – trading update

Electrocomponents (ECM) – trading update

Tuesday, 6 February

Ocado Group (OCDO) – final results

BP (BP) – final results

St Mowden Properties (SMP) – final results

Chipotle Mexican Grill (CMG) – Q4/2017, EPS estimate 1.338

General Motors (GM) – Q4/2017, EPS estimate 1.377

Snap Inc (SNAP) – Q4/2017, EPS estimate -0.155

Walt Disney Co (DIS) – Q1/2018, EPS estimate 1.614

Wednesday, 7 February

Twenty-First Century Fox (FOXA) – Q2/2018, EPS estimate 0.387

GlaxoSmithKline (GSK) – Q4 and full-year results

Tullow Oil (TLW) – final results

Rio Tinto (RIO) final results

Redrow (RDW) – interim results

Severn Trent (SVT) – trading update

Thursday, 8 February

TalkTalk (TALK) – trading update

Bellway (BWY) – trading update

Compass Group (CPG) – trading update

Tate & Lyle (TATE) – trading update

Ashmore Group (ASHM) – interim results

Beazley (BEZ) – final results

Commerzbank AG (CBK) – Y/2017, EPS estimate 0.351

Sources: Bloomberg/Companies

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