Weekly outlook: ECB, Bank of Japan monetary policy decisions and Netflix to report

Key events for UK wealth managers for the week starting 22 January


Monday 22 January

  • Chinese one and five-year interest rate decision

Tuesday 23 January

  • Full-year results from Crest Nicholson
  • Trading updates from Premier Foods
  • UK government borrowing
  • EU consumer confidence
  • In Europe, quarterly results from LM Ericsson and Logitech
  • In the US, quarterly results from Johnson & Johnson, Procter & Gamble, Verizon Communications, Texas Instruments, General Electric, Lockheed Martin, 3M, Baker Hughes and Halliburton
  • Bank of Japan policy announcements
  • Netflix Q4 update

Netflix will provide its Q4 update on Tuesday after bringing its share price up 150% since lows in spring 2022.

Russ Mould, AJ Bell investment director, Danni Hewson, AJ Bell head of financial analysis, and Dan Coatsworth, AJ Bell investment analyst, said: “Netflix’s shares have recovered so strongly as management has focused on profits and cashflow, not just customer acquisition, and has done so to great effect.

“The financial woes of its streaming rivals, who are grappling with losses, debts or both, has meant talk of consolidation is now all the rage – a rumoured coming together between Warner Bros Discovery (which owns Max) and Paramount (which owns Paramount+) is just one example of this. Netflix may also be benefiting from its broader back catalogue, as content producers scramble to develop new programming in the wake of the writers’ and actors’ strikes that affected much of 2023.”

At the end of its third quarter, Netflix held 247.2m subscribers after an 8.8m addition during the quarter. The increase was spread across regions, with the US, Europe, Asia, and Latin America all adding at least 1m subscribers and gaining in revenue, besides Asia which dropped less than 1%.

“However, Netflix’s real focus is longer subscriber growth for subscriber growth’s sake,” Mould, Hewson, and Coatsworth said.

“The streaming wars and cost of content, plus falling share prices, have since persuaded media executives to target growth in revenues, profit and cashflow instead. Netflix’s executive chair (and founder) Reed Hastings and co-chief executives Ted Sarandos and Greg Peters are no different.”

For Q4, Netflix set its sights on $8.7bn (£6.86bn) in sales, up from $7.9bn (£6.2bn) in Q4 2022, which would total $33.6bn (£26.5bn) in sales for the year and an operating margin of 20%. Expected earnings per share for the full year sit at $12.08 (£9.53) from last year’s $9.95 (£7.85), and are expected to jump up to $16.71 (£13.80) in 2024.

Wednesday 24 January

  • First-half results from Accrol
  • Trading updates from abrdn, Computacenter, TI Fluid Systems and Tullow Oil
  • Flash purchasing managers indices (PMIs) in Japan, Europe, the UK and US
  • Interest rate decision from the Bank of Canada
  • US oil inventories
  • In Asia, quarterly results from LG Display
  • In Europe, quarterly results from ASML, SAP and Alstom
  • In the US, quarterly results from Tesla, Abbott Labs, IBM, AT&T, LAM Research, Freeport-McMoRan, Kimberly-Clark, United Rentals, Las Vegas Sands, Seagate and Wolfspeed

Thursday 25 January

  • First-half results from NCC
  • Trading updates from Wizz Air, Fuller Smith & Turner, Britvic, CVS, Mitie, Dr Martens, FeverTree Drinks, Halfords, Foxtons and Workspace
  • German Ifo economic survey
  • National Bank of Belgium’s Courbe Synthetique economic survey
  • US durable goods orders
  • US new homes sales
  • US weekly initial unemployment claims
  • In Asia, quarterly results from SK Hynix, Hyundai Motor and LG Electronics
  • In Europe, quarterly results from LVMH, Christian Dior, Atlas Copco, STMicroelectronics, Sandvik, Nokia and Bankinter
  • In the US, quarterly results from Visa, Intel, Comcast, KLA-Tencor, Northrop Grumman, McCormick, Southwest Airlines, US Steel, American Airlines, Levi Strauss and Alaska Airlines
  • European Central Bank policy decisions

The European Central Bank will make its first policy announcement for the year on Thursday, following the Bank of Japan’s announcement on Tuesday.

“In theory, the two monetary authorities are about to head in different directions – economists and investors are wondering when the Bank of Japan might start to tighten policy by taking interest rates out of negative territory and throttling back its Quantitative Easing (QE) programme, while the question in Europe is when the ECB will start to ease policy by cutting rates,” Mould, Hewson, and Coatsworth said.

Leading up to the announcements, economists expect the Bank of Japan to keep its main policy the same rate is has been since 2016, -0.1%. As of November, the producer price index is increasing 0.3% year on year, down from a peak of over 10%.

“The BoJ is expected to move only when it sees signs that inflation will hit its 2% target on a sustainable basis,” Mould, Hewson, and Coatsworth said.

“The last published figure was 2.8% and increases in the headline consumer price index have exceeded the target for nearly two years, while the Bank of Japan’s preferred reading – its so-called core inflation figure – has done the same.”

The European Central Bank is also expected to main relatively steadfast, with the focus on the Main Refinancing Rate, which currently sits at 4.5%.

With an aim to work towards 2% inflation, markets have priced in five rate cuts to hit 3.25% by the end of the year.

“Interestingly, Spanish and French members of the Governing Council have done nothing to dampen such speculation in recent statements and the ECB also continues to shrink its balance sheet and is thus undoing some of the Quantitative Easing stimulus it has applied so liberally for so long,” Mould, Hewson, and Coatsworth said.

Friday 26 January

  • Trading update from WH Smith
  • GfK UK consumer confidence
  • US Personal Consumption Expenditure index
  • In Europe, quarterly results from Volvo, Kone, SGS and SCA
  • In the US, quarterly results from Caterpillar, American Express, Colgate-Palmolive and Autoliv