The Week Ahead: Middle East war dominates market outlook; Oracle and Adobe earnings next pieces in AI puzzle

The developing situation in the Middle East will be critical to how the market evolves over the coming week and dominate markets for weeks to come no doubt. With the situation dynamic and a lot of noise in this weekahead we detailsome of the main economic releases and earnings to keep focus while everything else is going on.US inflation and UK GDP reports are the main highlights for traders, while the latest pieces of the AI trade puzzle come by way of earnings from Oracle and Adobe.

Here’s the key events to watch over the next week.

Monday, 9 March

The market focus inevitably is on the Middle East as markets open for the week. On the data front China’s CPI and PPI inflation reports will be watched as the January consumer inflation eased to just +0.2% from +0.8% in December amid weaker consumer demand and a lack of stimulus. PPI remained deflationary, down 1.4% from a year before. German factory orders may be of interest – are defence contractors seeing any uplift, are carmakers struggling? A –4.1% decline is forecast.

Tuesday, 10 March

Oracle is scheduled to release earnings, days after reports it was slashing thousands of jobs due to a cash crunch, the result of its massive AI infrastructure buildout.The company was at the heart of the AI investment thesis last year but the stock has come under a lot of pressure since peaking in September, seeing a max drawdown of about 60% since as investors started to worry about rising debt levels, albeit we have seen tentative signs of recovery since the start of Feb as analysts have become more constructive once more and its $25bn bond sale eased worries about an AI debt wave. Ferguson, Spirax, Persimmon, Domino’s Pizza and Rotork are due to release earnings updates.

Wednesday, 11 March

February’s US CPI data will provide the latest inflation picture for the world’s largest economy before the outbreak of war in the Middle East. CPI declined 0.2% on the month in January, +2.4% on the year, signalling disinflation persisting. The question for the market is whether this trend can hold up against soaring energy prices, disrupted trade flows, and weaker global growth in the event of a prolonged Middle East conflict.

European defence manufacturers Rheinmetalland Leonardo due to update markets against the backdrop of the Middle East conflict and the recent surge in shares due to a mix of rising geopolitical tensions and increased government spending commitments for the sector. Elsewhere, Hochschild Mining, Legal & General and Balfour Beatty release latest results.

Thursday, 12 March

Bank of England governor Andrew Bailey is set to speak at a financial stability event in London and may address events in the Middle East and their impact on UK financial markets. Particularly, he may use this speech to address the market’s repricing for rate cuts by the Bank, with markets now seeing a very slim chance of a cut at the meeting on 19 March, having prior to the war seen the chance of a cut as high as 90%. US weekly unemployment claims figures are also due up, and likely to show continued resilience in the labour market.

Adobe – one of the chief losers from the AI-is-eating-software narrative in the market – reports earnings. Shares have more than halved in value over the last two years but have risen recently on reports Big Short investor Michael Burry is a buyer.

A few other earnings to look for – Wheaton Precious Metals, Ashtead, Informa and M&G and Savills.

Friday, 13 March

The week ends with a bit of meaty slate of data. First up, UK GDP figures – does it fit the narrative of a pickup in activity at the start of the year following the Budget? Or does it reflect continued labour market and consumer weakness? Later on, US core PCE inflation – the Fed’s preferred gauge – is released alongside data on durable goods orders, personal income, JOLTS jobs openings and UoM consumer sentiment and inflation expectations.