Welcome to Michael Kramer’s pick of the top three market events to look out for in the week ahead.
The last full trading week before Christmas promises to be an eventful one. Below we focus on UK and US inflation data for November, a trio of central bank interest rate decisions, and quarterly earnings from computer data storage company Micron Technology. But it’s also worth keeping an eye out for PMI data, retail sales and other priority events as the week progresses – see the events calendar, below, for more information.
After Friday, scheduled financial events slow to a crawl, with the Christmas and New Year holidays set to give investors and traders a much-needed break from the markets. Whatever sentiment the market is left with by Christmas is likely to carry over to the start of January.
This is our last Week Ahead of 2024 but we’ll be back with you on Friday 10 January. To those who mark the occasion, we wish you a merry Christmas. And to all our readers, we wish you a happy, healthy and prosperous new year.
UK, US November inflation data
Wednesday 18 December (UK CPI), Friday 20 December (US PCE)
Analysts estimate that the UK’s consumer price index (CPI) rose 2.6% in the year to November, up from 2.3% in October, implying a month-on-month increase of just 0.1% – a marked slowdown from the 0.6% monthly uptick recorded in October.
Meanwhile, the US personal consumption expenditures (PCE) price index, reportedly the Federal Reserve’s preferred measure of inflation, is expected to have increased 2.5% in the year to November, up from 2.3% in October, while the ‘core’ reading, which strips out volatile food and energy prices, is forecast to have risen 2.9%, up from 2.8% a month earlier. The monthly figure is expected to show a 0.2% increase for both headline and core PCE.
The two announcements are likely to ensure that GBP/USD remains the subject of traders’ attention throughout the week. The pound could be heading for a further decline against the dollar after failing to break above resistance at $1.28 in recent days. Momentum appears to be trending lower, based on the pair’s relative strength index, suggesting that resistance at $1.28 may hold. In that scenario, further dollar strength could send GBP/USD down towards $1.25.
GBP/USD, August 2024 - present
Central bank interest rate decisions
Wednesday 18 December (US), Thursday 19 December (Japan, UK)
The Federal Reserve kicks off the latest round of central bank rate decisions, with the market now pricing in a near-100% chance of a quarter-point cut to the federal funds rate. For the Bank of Japan, the outlook is less certain. A rate hold may be the most likely outcome, with the market pricing in a roughly 20% chance of a rate hike. The Bank of England is also expected to leave its benchmark interest rate unchanged.
If there is to be a surprise, it could come from the Bank of Japan, given recent headlines that have neither ruled out nor confirmed a rate hike. This room for doubt suggests that the rate-hike odds may be higher than the current 20% expectation implies.
The Japanese yen has weakened versus the dollar from ¥149.60 at the start of December to current levels just above ¥153. The yen could depreciate to ¥153.60 and remain within the 61.8% retracement range. If USD/JPY advances beyond ¥153.60, a return to mid-November levels of around ¥154 cannot be ruled out. On the other hand, if the 61.8% retracement acts as resistance and the BoJ announces a surprise hike, the yen could strengthen against the dollar, pushing USD/JPY back down to support near ¥148.60, and potentially towards ¥146.40.
USD/JPY, July 2024 - present
Micron Technology Q1 results
Wednesday 18 December
Micron is set to report fiscal first-quarter 2025 results after the close of trading, with analysts expecting earnings of $1.76 a share, up from a loss of $0.95 a share in the year-ago period. Revenue is forecast to have risen 84.4% to $8.7bn. Adjusted gross margin, a key metric, is projected to have expanded to 39.5%, up from 36.5% in the previous quarter. Capital expenditure in Q1 is expected to come in at $3.4bn. Looking ahead to the fiscal second quarter, analysts forecast revenue growth of 55.3% to $9.0bn, an increase in adjusted gross margin to 41.7%, and a slight decrease in capex to $3.3bn.
The options market is pricing in a post-Q1 results move higher or lower of roughly 10.3% for Micron shares, which closed at $98.24 on Thursday, up 19.3% year-to-date. The Nasdaq-listed company's stock has been range-bound since mid-September, trading between $95 and $115. A break below the $95 support level could push the shares down to the early-September lows of $86. If the stock moves in the other direction following the results, a 10.3% swing higher would see the stock fall just short of resistance at $115, leaving that resistance level in place.
Micron Technology share price, January 2024 - present
Key economic and company events
The coming week’s major economic announcements and scheduled US and UK company reports include:
Monday 16 December
• China: November industrial production, November retail sales
• Eurozone, France, Germany, UK, US: December flash purchasing managers’ index (PMI) data
• Results: No major scheduled earnings announcements
Tuesday 17 December
• Canada: November consumer price index (CPI)
• UK: October unemployment rate
• US: November retail sales
• Results: Heico (Q4)
Wednesday 18 December
• Eurozone: November CPI
• New Zealand: Q3 gross domestic product (GDP)
• UK: November CPI, producer price index and retail price index
• US: Federal Reserve interest rate decision
• Results: Birkenstock (Q4), General Mills (Q2), IntegraFin (FY), Jabil (Q1), Micron Technology (Q1)
Thursday 19 December
• Australia: December consumer inflation expectations
• Japan: Bank of Japan interest rate decision
• UK: Bank of England interest rate decision
• US: Q3 GDP
• Results: Accenture (Q1), CarMax (Q3), Cintas (Q2), Conagra Brands (Q2), Darden Restaurants (Q2), Factset Research Systems (Q1), FedEx (Q2), Lennar (Q4), Nike (Q2), Paychex (Q2)
Friday 20 December
• UK: November retail sales
• US: November personal consumption expenditures (PCE) price index
• Results: Carnival (Q4)
Note: While we check all dates carefully to ensure that they are correct at the time of writing, the above announcements are subject to change.
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