Editor’s Note
This week’s market turbulence underscores the diverging fortunes of tech and traditional sectors, with AI developments and crypto volatility driving sentiment. As key economic data looms, investors should brace for further swings.
International markets experienced significant volatility this week, with sharp movements in the software and cryptocurrency sectors, while the development of artificial intelligence also drew widespread attention. U.S. stocks saw mixed performance: the Dow Jones rose 2.50% for the week, the Nasdaq fell 1.84%, and the S&P 500 edged down 0.10%. European markets rallied across the board, with the UK’s FTSE 100 up 1.43%, Germany’s DAX 30 up 0.74%, and France’s CAC 40 up 1.81% for the week.
The coming week presents numerous focal points. The delayed release of U.S. employment and inflation data will become the core focus for the market. European markets need to pay attention to the Eurozone and UK’s fourth-quarter Gross Domestic Product (GDP) data. In Asia, investors will closely watch the results of Japan’s House of Representatives election on February 8th, which will reshape Japan’s fiscal and monetary policies, and also look for clues on the timing of the Bank of Japan’s next rate hike. The U.S. earnings season is entering its latter half, with the performance of star stocks in high-correlation fields like application materials and AI warranting attention.
The U.S. January non-farm payrolls data will be released on the 11th local time. This data, delayed from February 6th due to a partial U.S. government shutdown, will guide investors’ judgment on the timing of the Federal Reserve’s next rate cut. Recent data shows the U.S. economy remains strong overall, but the labor market is weakening and inflation growth is slowing. If this data shows weakness, it could push forward market expectations for a rate cut.
Data from the London Stock Exchange Group (LSEG) shows the money market has now fully priced in a 25 basis point rate cut by the Fed in July. JPMorgan Chase expects the U.S. to add 90,000 non-farm jobs in January, while also reminding that this report will be accompanied by annual benchmark revisions and methodological adjustments, bringing unusually high uncertainty risks.
The U.S. January Core Consumer Price Index (CPI) will be released on the 13th. The market will also closely watch this data to judge whether the degree of easing in inflation pressure is sufficient to support the Fed in cutting rates in the coming months. HSBC believes the January inflation data is of key significance.
The bank expects the U.S. January CPI year-on-year growth rate to remain unchanged at 2.6%, while the overall Consumer Price Index year-on-year growth rate will drop from 2.7% to 2.5%.
