Weekly Outlook: Fed and BoE to make rate decisions

Key events for UK wealth managers for the week starting 29 January


Monday 29 January

  • Trading update from Hollywood Bowl
  • In Europe, quarterly results from Philips
  • In the US, quarterly results from Nucor, F5 Networks, Sofi and Whirlpool

Tuesday 30 January

  • Full-year results from SThree and Wynnstay
  • Trading updates from SSP, Pets At Home and Saga
  • BRC UK shop price index
  • UK mortgage approvals
  • EU Q4 GDP growth
  • Diageo first-half results

Global drinks-producer Diageo will release its half-year results on Tuesday following a difficult year for the firm. Its longstanding chief executive Ivan Menezes announced his retirement, but sadly passed away before the planned date.

Debra Crew, Menezes’s successor, issued a profit warning in November.

Russ Mould, AJ Bell investment director, Danni Hewson, AJ Bell head of financial analysis, and Dan Coatsworth, AJ Bell investment analyst, said: “That alert cited weakness in Latin America, a slowdown in momentum in Europe and Asia – notably China – and unchanged growth rates in America in the second half of the calendar year of 2023 compared to the first. The only area to show an acceleration was America, in terms of organic growth rates.

“As a result of all of that, Diageo’s shares are down by a quarter over the past year, and they are no higher now than they were in 2018. It is almost as if Covid, lockdowns, interest rate cuts and furlough schemes never happened.

The trio added: “All of these raised questions about China, and especially Diageo’s ‘premiumisation’ strategy as it focuses on so-called super-premium-plus brands. Luxury goods firms are facing a slowdown and maybe they have pushed their prices too far, as consumers get less help from tax breaks and low interest rates and even face tax increases and higher borrowing costs.”

  • Case-Shiller US house price index
  • Conference Board US Consumer Confidence index
  • US Job Openings and Labor Turnover Survey (JOLTS)
  • In Japan, quarterly results from Canon, Komatsu and NEC
  • In Asia quarterly results from L’Occitane
  • In Europe, quarterly results from BBVA
  • In the US, quarterly results from Microsoft, Alphabet, AMD, Pfizer, UPS, Stryker, Starbucks, Mondelez, General Motors, Electronic Arts, Skyworks and Teradyne

Wednesday 31 January

  • Full-year results from GSK
  • Trading update from ITM Power
  • Purchasing managers indices (PMIs) in China
  • German retail sales
  • ADP US jobs survey
  • US oil inventories
  • In Japan, quarterly results from Hitachi, Advantest and Fujitsu
  • In Asia, quarterly results from Samsung Electronics, Alibaba and UMC
  • In Europe, quarterly results from Novo Nordisk, Novartis, Banco Santander, H&M and SKF
  • In the US, quarterly results from Mastercard, Qualcomm, Boeing, Rockwell, Qorvo and Wolfspeed
  • Fed interest rates decision

On Wednesday, the Federal Open Market Committee will meet to discuss the central bank’s next course of action on interest rates.

AJ Bell’s Mould, Hewson and Coatsworth are expecting the Fed to keep the headline Fed Funds rate unchanged at 5.25%.

“In the meantime, the markets are still pricing in six rate cuts from the Fed, down to 4% by the end of 2024, with the first cut coming in the meeting in May, according to data from the CME Fedwatch service. The chances of a cut in March are now seen at barely 40%, down from 75% a month ago,” the trio said.

Thursday 1 February

  • Full-year results from Shell
  • First-half results from Rank
  • Trading updates from BT, Glencore, 3i, Airtel Africa and AG Barr
  • Purchasing managers’ indices for manufacturing from Japan, Asia, Europe, the UK and USA
  • EU inflation
  • OPEC meeting
  • Challenger, Gray & Christmas job losses survey in the USA
  • US car sales
  • US weekly initial unemployment claims
  • In Japan, quarterly results from Takeda Pharmaceutical, Kyocera and Rohm
  • In Europe, quarterly results from Roche, Sanofi, ABB, BNP Paribas, Siemens Healthineers, Deutsche Bank, UPM-Kymmene, Stora Enso and Volvo Car
  • In the US, quarterly results from Apple, Meta Platforms, Merck, Altria, Microchip, Ferrari, Royal Caribbean, Ball, Clorox, Peloton and US Steel
  • Bank of England interest rates decision

The Bank of England will follow the Fed on Thursday in making its next monetary policy decision.

Like the Fed, the BoE is expected to leave its base rate unchanged at 5.25%, according to AJ Bell’s Mould, Hewson and Coatsworth.

Meanwhile, the trio also believe the bank will stick with its QT programme, whereby the central bank reduces the bond holdings on its balance sheet by £100bn, or 13%, to £658 billion between November 2023 and September 2024.

“Markets had started 2024 expecting six rate cuts down to 3.75%, with a first move from governor Andrew Bailey and colleagues in March. That has been recalibrated to five cuts down to 4% with the first one in May, again after stickier-than-expected inflation figures,” they said.

Friday 2 February

  • Trading update from YouGov
  • US non-farm payrolls, unemployment rate and wage growth
  • In Europe, quarterly results from UniCredit and Caixa Bank
  • In the US, quarterly results from ExxonMobil, AbbVie, Chevron, Bristol Meyers Squibb and AON