Jan 23 (Reuters) – Gulp down a motion sickness tablet because the whirlwind is set to continue next week. There’s a spicy first Fed meeting of the year, teetering U.S. and European relations, jitters in Japan, Apple, Microsoft, Meta, Tesla and Samsung all report earnings and there’s a deluge of emerging market interest rate decisions.
Here’s all you need to know about what will be moving markets by Marc Jones and Amanda Cooper in London, Lewis Krauskopf in New York and Gregor Stuart Hunter in Singapore.
1/SAFE GREENLANDING ZONE?
With U.S. President Donald Trump, Europe and NATO stepping back from their icy precipice over Greenland, markets – with the notable exception of the gold bugs and weapons firms – will be hoping the tensions continue to melt away.
For that they will want to see more tangible details about the “framework deal” the sides have struck, and for the crisis to stay safely out of Trump’s social media feed.
It could help bring world stock markets back to record highs and put the brakes on gold’s seemingly unstoppable rush towards $5,000 an ounce, although given the way this year has started, it might just make way for another geopolitical flashpoint.
2/FIGHT THE FED
The Federal Reserve holds its latest interest rate-setting meeting and, with Jerome Powell & co widely expected to hold rates steady on Wednesday, focus will be just as much on the threats to the U.S. central bank’s cherished independence.
Investors will still be watching for signals when rates might move, of course, but this will be the first time Powell holds a Fed press conference since this month’s revelations that the Trump administration had launched an investigation into his multi-billion dollar refurbishment of the Fed’s headquarters.
Powell has slammed the move as a “pretext” to try to gain more influence over interest rates. It also adds to the other two key subplots in the independence row – the U.S. Supreme Court’s case over Trump’s bid to fire governor Lisa Cook and his still-to-be-announced decision on who takes over from Powell as Fed chief in May.
3/HOW MAGNIFICENT?
Four out of the seven so-called “Magnificent Seven” U.S. tech giants report earnings next week – Microsoft, Apple, Facebook parent Meta, Elon Musk’s Tesla – as does South Korea’s Samsung.
The key for many will be to what extent their massive spending – funded increasingly by debt in some cases – on the global AI arms race is paying off.
It is no longer enough just to beat forecasts. Companies have to smash them out of the ground and offer racy enough guidance that make investors feel comfortable about their stratospheric valuations.
The geopolitical ructions of the last couple of weeks aside, it’s pockets of the market beyond AI that are performing most strongly right now. The Mag 7 may find shareholders that have become accustomed to blockbuster results want even more magnificence.
4/JITTERS IN JAPAN
Campaigning will be hotting up in Japan next week ahead of the snap February 8 election that Prime Minister Sanae Takaichi has called in a bid to tighten her grip on the ruling Liberal Democratic Party.
Takaichi’s pledges to boost spending and suspend the country’s food sales tax for two years have been pummelling the yen and Japanese government bonds, so much so that Finance Minister Satsuki Katayama had to call for calm this week and the Bank of Japan deployed some interest rate hike hints.
Analysts worry the yen has become unmoored from its traditional anchor – the gap between Japanese and U.S. long-term interest rates – and that alongside the erratic bond market behaviour, shows that investors are now sweating over the country’s 221% debt-to-GDP ratio.
5/HOLD TIGHT
There’s a smorgasbord of emerging market central banks meeting next week and though there will not be many immediate movements, there will be plenty of signals to scan as the hot streak for EM currencies, debt and stocks rumbles on.
Heavyweight Brazil is widely expected to keep its rates unchanged at 15% again, but may well hint at a cut. Chile is expected to be a near carbon copy with its 4.5% rates. Hungary should stick at 6.5% as its crucial election draws closer. South Africa is tipped to stay at 6.75% due to high electricity inflation, although a cut has not been completely dismissed.
It will not all be sideways though. Colombia is expected to cut its rates between a quarter and a half point, despite recent wage increases, and Ghana is seen slashing its rate by 300 basis points having seen its currency, the cedi, begin to wobble after its gold-linked rush over the last year.
(Graphics by Prinz Magtulis, compiled by Marc Jones, Editing by Alex Richardson)
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