Week Ahead: Investors Focus on U.S. Inflation Data

This week, several key economic events will shape market sentiment. On Monday, Japan will release its current account balance, providing insights into trade and investment flows. The NAB Business Confidence report on Tuesday will reflect the business's sentiment in neighbouring Australia. On Wednesday, the most awaited U.S. CPI as the critical measure of inflation will be released. The U.K. will report GDP growth on Thursday. At the same time, initial jobless claims and PPI data will be released in the United States, giving a broader perspective on labour market situations and wholesale inflation. To wrap up the week, the release of U.S. retail sales data on Friday will provide more evidence regarding consumer spending trends.

Here are the week’s key events:

Monday, 10 February 2025: Japan Current Account Index

The current account index analyses the difference in value between exported and imported goods, services and interest payments during the reported months. Japan had a current account surplus of 3.353 trillion Yen in November 2024 compared to preceding estimates of 2.691 trillion yen and the previous month at 2.457 trillion Yen. The upcoming current account is expected to decrease, mainly driven by Yen's recent appreciation after tightening its monetary policy and weaker global demand.

(Japan Current Account Index Chart, Source: Trading Central)

Top US company earnings: MacDonald’s (MCD), Vertex (VRTX), DBS Group Holdings (DBSDY)

Tuesday, 11 February 2025: National Australia Bank Business Confidence

As of December 2024, the NAB Business Confidence Index was -2 index points, down slightly from -3 posted in November and still below its long-term average. Data for January is expected to climb higher after the NAB Business Conditions Index gained three points to +6, suggesting better trading conditions and employment. This positive trend suggests that businesses are experiencing a more favourable environment, which could boost confidence.

(National Australia Bank Business Confidence Chart, Source: Trading Central)

Top US company earnings: Coca-Cola (KO), S&P Global (SPGI), Shopify Inc (SHOP)

Wednesday, 12 February 2025: U.S Consumer Price Index (CPI)

As of December 2024, the U.S. Consumer Price Index (CPI) rose 0.4% month-over-month, following a 0.3% gain in November. The annual inflation climbed to 2.9% from the preceding month's 2.7%. Furthermore, the U.S. labour market remains strong, with robust consumer spending behind the demand for goods and services. This sustained demand can lead to higher prices, which is expected to contribute to an increase in the CPI.

(U.S Inflation Rate YoY Chart, Source: Trading Central)

Top US company earnings: Cisco (CSCO), Alibaba (BABA), CME Group (CME)

Thursday, 13 February 2025: U.K. GDP, U.S. Jobless Claims, U.S PPI

The U.K. economy expanded to 0.1% in November 2024 after contracting 0.1% in October. The U.K. economy is expected to experience modest growth in the near term. Despite the slight growth in November, the U.K. economy has shown signs of stagnation, with minimal growth over recent quarters. Factors such as global trade tensions and domestic policy decisions continue to pose challenges.

(U.K. GDP YoY Chart, Source: Trading Central)

The number of initial jobless claims in the United States for the week ending January 11, 2025, increased by 14,000, reaching 217,000 against market expectations of 210,000. However, it is expected to remain relatively stable or potentially decrease slightly in the upcoming weeks. The jobless claims in the U.S. still show that the labour market seems resilient and going downward, indicating strength.

(U.S Initial Jobless Claims Chart, Source: Trading Central)

In December 2024, the Producer Price Index for final demand increased by 0.2% compared with 0.4% in November, with an unadjusted basis increase of 3.3% over the course of a year. The PPI is expected to experience a modest increase in the near term. This upward pressure on producer prices could be driven by ongoing supply chain constraints and rising costs.

(U.S PPI YoY, Source: Trading Central)

Top US company earnings: Nestle (NSRGY), Siemens (SIEGY), Applied Materials (AMAT)

Friday, 14 February 2025: U.S Retail Sales

The upcoming US retail sales data is expected to increase slightly. The US economy shows a measure of resilience, with consumers remaining strong. Factors such as a strong labour market and increased consumer confidence are likely to support continued growth in retail sales.

(U.S Retail Sales YoY Chart, Source: Trading Central)

Top US company earnings: Hermes (HESAY), Moderna (MRNA)

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