Welcome to Michael Kramer’s pick of the top three market events to look out for in the week ahead.
The US will have a holiday-shortened trading week, with markets closed on Monday 20 January in observance of Martin Luther King’s birthday. That also happens to be the day of president-elect Donald Trump’s inauguration. The coming week is light on economic announcements, aside from a Bank of Japan rate meeting on Friday which we preview below. On the earnings front, Netflix and easyJet are among the companies set to report their latest quarterly results.
Netflix Q4 results
Tuesday 21 January
Analysts expect Netflix’s fourth-quarter results, due out after the close of trading on Tuesday, to show that earnings grew 98.1% to $4.18 a share, on revenue of $10.1bn, a year-on-year increase of 14.4%. Net subscriber additions are expected to come in at 9.175 million, lifting the streaming giant’s total number of subscribers to 290.9 million. For the first quarter, analysts anticipate earnings to grow 13.7% to $6.00 a share, while revenue is projected to climb 11.9% to $10.5bn.
Netflix’s shares, down 5% since the turn of the year at $842.37 as of Thursday’s close, could move up or down by around 8.1% after the Q4 results are released, based on options market pricing. The options market also indicates that support lies between $830 and $840, with resistance around $880.
The bearish positioning could result in the stock rising if the company issues results that are in line with or better than expected. Once the results are released and event risk passes, implied volatility levels are likely to fall sharply, causing puts to lose value. That could result in hedging flows that might drive the stock upward, potentially filling the gap around $880 and maybe even sending the stock up to a second gap at $925.
However, if the Nasdaq-listed company’s results disappoint the market and a sell-off sends the stock below support at $840, the share price could slide towards the next significant support level at $770.
Netflix share price, 14 October 2024 - present
EasyJet Q1 results
Wednesday 22 January
EasyJet is expected to report that first-quarter revenue grew 13% year-on-year to £203.4m, as total seat capacity increased 23.1% to 28.3 million. For Q2, analysts forecast that revenue will rise 11.7% year-on-year to £164m, with total seat capacity increasing 5.9% to 20.4 million. The options market is signalling an implied post-earnings move of 7.2% higher or lower.
Shares of the British budget airline have fallen more than 10% in the past month to around 505p, as of Friday morning in the UK. The sharp decline since mid-December has sent the stock below an uptrend that formed after the August low (see chart, below). However, the share price appears to have entered oversold territory, trading near the lower Bollinger Band and with the relative strength index (RSI) below 30.
At their current level, the shares have support at 482p, which aligns with a 61.8% retracement of the August-to-December advance. If this support holds, it’s possible that the shares could rally back to the 20-day moving average of around 542p in the near term.
EasyJet share price, March 2024 - present
Bank of Japan interest rate decision
Friday 24 January
The market is currently pricing in an 85% chance that the Bank of Japan will raise rates at its January meeting. The odds have surged recently as officials have hinted at the possibility of an imminent rate increase.
Japan’s central bank has proceeded cautiously in recent months, mainly due to market fragility and the global volatility that followed its July rate hike. But after the yen weakened against the dollar in December following the BoJ’s rate hold, policymakers in Tokyo find themselves in a tricky position.
If the central bank raises rates by a quarter of a percentage point to 0.5%, the US-Japan interest rate differential would still be wide, potentially keeping the yen under pressure. But with USD/JPY testing support near current levels of around ¥155, it’s also possible that a rate hike could strengthen the yen and send USD/JPY down to ¥149. On the other hand, if officials again keep rates at 0.25% and signal a rate hike next time, the yen could depreciate further, with USD/JPY potentially moving towards ¥160.
USD/JPY, June 2024 - present
Key economic and company events
The coming week’s major economic announcements and scheduled US and UK company reports include:
Monday 20 January
• China: People’s Bank of China interest rate decision
• Switzerland: World Economic Forum at Davos (runs until 24 January)
• US: Markets closed (federal holiday)
• Results: No major scheduled company earnings announcements
Tuesday 21 January
• Canada: December consumer price index (CPI)
• New Zealand: Q4 CPI
• UK: November unemployment rate and employment change, December claimant count change
• Results: Charles Schwab (Q4), Netflix (Q4)
Wednesday 22 January
• Japan: December exports, imports and trade balance
• Results: Abbott Laboratories (Q4), easyJet (Q1), JD Wetherspoon (Q2), Johnson & Johnson (Q4), Pensionbee (Q4), Procter & Gamble (Q2)
Thursday 23 January
• Australia: January Judo Bank purchasing managers’ index (PMI) data
• Canada: November retail sales
• Japan: December CPI
• US: Weekly initial jobless claims, to 17 January
• Results: GE Aerospace (Q4), Intuitive Surgical (Q4), Texas Instruments (Q4), Union Pacific (Q4)
Friday 24 January
• Eurozone, France, Germany, UK, US: January flash PMI data
• Japan: Bank of Japan interest rate decision
• Results: American Express (Q4), Nextera Energy (Q4), Verizon (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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