This week and January as a whole will be dominated by December quarter earnings, exploration and production reports from a host of miners here and offshore, economic data – especially from the US and China and the usual river of forecasts for shares, bonds, commodities and anything else in the markets.
And to cap it off, there’s the December inflation reading next week and then, in the last week of the month, the first Fed meeting of the year which should produce the usual flood of views, news and market moves.
As is always the case, some dates will be more important than others.
Covid-stricken China will hold the greater interest simply because the world’s second largest economy is being widely tipped to have contracted in the final three months of 2022, but is now re-opening as a reaction to the slide in activity, especially in December.
December’s activity data for Chinese manufacturing and services in fact contracted further last month thanks to the rapid rise in Covid cases which hit output, sales, retailing and a host of services.
That was a warning about the strength of demand in China and will become more apparent this week and next.
So we get Chinese inflation data for December and 2022 for consumers and producers on Thursday with more signs of disinflation or even deflation appearing and Saturday sees the release of trade data for December and 2022.
Analysts are expecting another month of falls after the surprisingly big drops in November of 8.7% for exports and 10.6% for imports. That should mean a solid trade surplus which will mean that the 2022’s total will be close to a record (which will be meaningless).
Tuesday January 17 sees the major GDP figures for December and 2022 released, along with key activity data on retail sales, investment, production, house prices and employment.
The story they will tell won’t make for happy reading in China or among its major customers and suppliers like Australia.
China’s 2021 GDP was upgraded in the break from an annual rate of 8.1% to 8.4%, which as one analyst put it, will make the size of the fall in 2022’s GDP just that much larger and more shocking.
China’s economy contracted in the June quarter by 2.7% but grew 3.9% annually in the three months to September for an annual through the year rate of 3%. Some analysts think that could change to a slide for the full year.
The Chinese economy re-opened yesterday as Covid restrictions were finally eased – that is not going to have any significant effect for a while as the impact of the latest wave of the pandemic rolls across the country.
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After China, events in the US – especially Fed meetings, jobs and inflation data – will again dominate headlines and markets there and globally.
Last Friday saw the important December jobs and wages data for the US released: 223,000 new jobs were created last month, more than forecasts at around 200,000, while the unemployment rate fell to 3.5%, 0.2 percentage point below the expectations and a 64 year low.
Wages growth slowed to an annual 4.6%, the lowest for 16 months
The job growth marked a small slowing from the 256,000 gain in November, which was revised down 7,000 from the initial estimate.
In the wake of that news, let’s look at some important days for this month and there’s none will be more vital for the markets than the two day Fed meeting – the first for the year – starting January 31 with the important decision, statement and media update from chair Jay Powell happening on the first of February.
The early betting is for a rise of 0.25% but the size will again depend on the data in our next data release – the US Consumer Price Index for December and 2022 on January 13, with the producer price index out on January 19 and retail sales data to be issued the same day – both for last month.
A fourth major bit of data for the US this month will be the first estimate for US 4th quarter GDP to be issued on January 26. Solid growth is the early forecast.
After 2022’s shellacking, investors will be looking/hoping for a better 2023 and those wishes will be tested by the 4th quarter (and in most cases full year) earnings releases starting with four major banks – Bank of America, Citi, JPMorgan Chase and Well Fargo) which all report this Friday.
Goldman Sachs and Morgan Stanley report January 17 and those reports will all but set up the market’s view of the December quarter reporting season.
But there will be other reports that will test investors – Netflix on January 19, Microsoft on January 24, Tesla on January 25, Apple on January 26, Chevron on January 27.
Meta, Alphabet and Amazon don’t report until early next month. So instead of the health of the all-important tech sector being quickly assessed with quarterly reports clumped closely together, this time the December, 2022 quarter’s reports will be spread over two weeks which could mean a lot of pain if the figures are not good.
Apple could be the big negative here with its product line, especially the iPhone, tied to the wobbly health of the Chinese economy and its contract workforce.
Companies in the S&P 500 are expected to report a 3.5% drop in earnings for the fourth quarter, according to data group, FactSet.
Analysts expect earnings to then remain roughly flat through the first half of 2023. The key influences will again be the size of the earnings from energy giants like Chevron and Exxon Mobil (which has already forecast a weaker outcome).
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In Australia it will be a quieter month – the summer holidays will be with us to the end of the month, but January 25 will bring the latest inflation updates – the monthly indicator for the month of December and the usual quarterly report for the three months to December.
Both are expected to show inflation rising from 7.3% in the three months to September and 6.9% in the monthly indicator for October. The indicator for November will be released this Wednesday, January 11.
Labour force data for December will be issued on January 19 and economists will be looking for signs of a weakening in the strength of jobs creation at the end of 2022.
Despite the rapid rises in interest rates by the Reserve Bank, the jobs market was solid heading into the holidays and November saw a rise in new jobs, and solid participation rates.
Retail sales figures for November will also be issued and analysts will be looking to see if there are any signs of an easing in spending ahead of the usual uptick in December.
Many retailers started so-called black Friday sales in late November but the impact won’t be apparent until the December figures in a month’s time.
This week also sees job vacancies for November from the Australian Bureau of Statistics, building approvals and trade data for November.
Australian corporate reports will be dominated by December quarterlies, half yearlies and 12-month figures from the likes of BHP (half year, January 19), Rio Tinto, January 16 (full year). Fortescue Metals releases on January 25. Allkem is due to release its report today (Monday).
Lithium major Pilbara Minerals and Chalice Mining – the Julimar nickel, copper, cobalt, palladium and platinum explorer – are due to release quarterlies in the final week in this month; Woodside and Santos in around a fortnight’s time; Newcrest (half-yearly) on January 25.
