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Saxo Spotlight: What’s on the radar for investors & traders this week?
Macro

Saxo Spotlight: What’s on the radar for investors & traders this week?

APAC Strategy Team

Summary:  The US Treasury yields have started the week softer, but the narrative that the Fed’s hawkishness is priced in by the market may be put to test as Chair Powell appears for testimony and the US jobs data for February comes out in the week ahead. China’s modest growth targets for 2023 set at the weekend meetings may spur some caution and further policy announcements remain on watch. In addition, central bank meetings from Australia, Canada and Japan are likely to create short-term FX volatility, while company earnings from Trip.com, CATL, JD.com, Oracle and others will be on the radar.

Powell’s testimony and US jobs data to keep markets wobbly

The next test of the US economy comes at the tail end of this week as the February jobs data is reported. Over the last few weeks, data out of the US has been far more resilient than expected, fueling bets that the Fed will have to raise rates beyond what was communicated earlier and rates will stay elevated for longer as well. Bloomberg consensus expectations point to another strong jobs report after the blowout report of January, with headline jobs expected to come in again at 200k+, but risk of disappointment remains given the scope of correction from +517k in January. The unemployment rate is expected to remain unchanged at 3.4%, while wage growth is projected to accelerate. Most early indicators such as the business surveys from S&P pointed to an acceleration in hiring, while applications for unemployment benefits remained historically low. 

Ahead of Friday’s jobs report, investors will also be watching Congressional testimony from Fed Chair Jerome Powell on Tuesday and Wednesday. He is expected to keep a hawkish stance in light of the strong data over the last few weeks. US yields and the US dollar can continue to run higher in that case, but if the message from Powell remains neutral then equities could continue to rally again.

RBA expected to be more aggressive with its tone on Tuesday and Wednesday

The RBA is expected to hike rates again by 25bps. However, the key is to watch RBA commentary - and if the RBA continues with its more hawkish tone. Consider the RBA’s aggressive rhetoric of making further hikes has pressured the Australian equity market, with the market now expecting interest rates to peak at 4.2% in September, with potentially no rate cuts this year. Should the RBA maintain its aggressive shift, the Aussie dollar (AUDUSD) could knee-jerk higher. RBA Governor Philip Lowe speaks the next day, on Wednesday, at the AFR Business Summit.

Key agenda items to watch on China’s Two Sessions this week

The key events to watch on the agenda of the National People’s Congress (NPC) this week are the presentation of the state institution reform proposal on Tuesday and the announcements of the appointment of top leaders and senior officials from Friday to Sunday. The NPC will conclude next Monday morning, March 13.

China’s outstanding aggregate financing expected to rise as loans and bond issuance picking up

While seasonality may drive a fall in new aggregate financing in February from January, the year-on-year growth of the outstanding amount is expected to pick up steam due to increases in bank loans and government bond issuance.

The growth in CPI is expected to slow to 1.9% Y/Y in February from 2.1% in January and PPI to contract further to -1.3% Y/Y but the week’s highlight in the data front will be on the aggregate financing.

Bank of Japan Governor Kuroda’s final meeting

This week will be the last Bank of Japan meeting for its current Governor Kuroda, and there remain risks that he may part with sparks. Inflation and wage growth continue to pick up pace in Japan, even though growth signals have been bleak lately and are relying on a strong pickup in Chinese demand. Incoming Governor Ueda has also signaled policy continuity, with hints that he echoes Kuroda’s views on inflation being externally-driven and likely to come off soon. Tokyo CPI for February also came off its January highs, but mostly driven by PM Kishida’s subsidies that reduced the electricity price burden. If Kuroda ends his term with a very dovish tone, that could spell trouble for yen, especially if US yields continue their run higher this week.

Company news to watch this week

All eyes will be CATL - which is Tesla’s battery supplier and the world’s largest battery maker. The market is expecting revenue growth of above 80% and full-year EPS of 2.65. We think CATL’s results could be a pleasant surprise to the market, given it sold its $856 million stake in Australia’s biggest lithium company, Pilbara Minerals. CATL’s outlook will also be watched closely – as a guage of how much car makers battery costs could rise in 2023.

Adidas results will also be on watch. As reported in Saxo’s Quick Take on Friday, the company accrued a large amount of Yeezy sneaker-inventory after Adidas abruptly ended Ye’s partnership. After a poor string of results, analysts expect Adidas to report Q4 revenue of €5.2bn up 1% y/y and EBITDA of €-419mn.

Also on watch, are CrowdStrike (CRWD), Campbell Soup (CPB), JD.com (JD) and Oracle (ORCL) results.
We cover what’s worth watching with these industry proxies in our Week Ahead report, which you can access here.

The world’s largest commodity miners go-ex-dividend; which could trigger a rise in volatility

Woodside goes ex-dividend on March 8, followed by BHP and Rio on March 9. For investors it means they will  have a volatile week, while option holders of these stocks won’t see a change. For other investors implications and what else to know, click here.

 

Macro data on watch this week:

Monday 6 March

  • South Korea CPI (Feb)
  • Eurozone S&P Global Construction PMI (Feb)
  • Germany S&P Global Construction PMI (Feb)
  • United Kingdom S&P Global/CIPS Construction PMI (Feb)
  • Eurozone Retail Sales (Jan)
  • United States Factory Orders (Jan)

Tuesday 7 March

  • South Korea GDP (Q4, revised)
  • Australia Trade Balance (Jan)
  • China (Mainland) Trade (Feb)
  • Australia RBA Cash Rate (7 Mar)
  • Germany Industrial Orders (Jan)
  • Taiwan CPI and Trade (Feb)
  • United States Wholesale Inventories (Jan)
  • Fed Chair Powell’s Testimony Before Senate

Wednesday 8 March

  • Japan Current Account (Jan)
  • Germany Industrial Production and Retail Sales (Jan)
  • Eurozone GDP (Q4, revised)
  • United States ADP National Employment (Feb)
  • United States International Trade (Jan)
  • Canada Trade Balance (Jan)
  • United States JOLTS Job Openings (Jan)
  • Canada BoC Rate Decision (8 Mar)
  • Fed Chair Powell’s Testimony Before House

Thursday 9 March

  • Japan GDP (Q4, revised)
  • China CPI, PPI (Feb)
  • Malaysia Overnight Policy Rate
  • United States Initial Jobless Claims

Friday 10 March

  • Germany CPI (Feb, final)
  • United Kingdom monthly GDP (Jan)
  • United Kingdom Goods Trade Balance (Jan)
  • United States Non-Farm Payrolls, Unemployment, Average earnings (Feb)
  • Canada Unemployment Rate (Feb)
  • Japan BOJ Rate Decision (10 Mar)
  • China M2, New Yuan Loans, Loan Growth (Feb)

Earnings on watch this week:

  • Monday: Trip.com
  • Tuesday: Ashtead Group, Sea Ltd, Ferguson, Crowdstrike
  • Wednesday: Ping An Bank, Thales, Adidas, Geberit, Cathay Pacific
  • Thursday: CATL, Deutsche Post, JD.com, Prada
  • Friday: Daimer Truck, AIA Group, Oracle, DiDi Global

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