✔️ Tech companies present quarterly results this week;
✔️ Fed and ECB will release new interest rate decisions;
✔️ Market can go either way depending on the presented figures.
With the Nasdaq's continued recovery, Bitcoin (BTC) and the altcoin sector were quite bullish last week. Strong sales figures from Tesla, along with better-than-expected US economic data, had a positive impact on equity and crypto markets in the second half of last week. With the rising number of durable good purchases (jewelry, bricks and cars), combined with a solid housing market, investors are slowly warming up. Partly because of this, the Bitcoin price reached a new monthly high of US$23,966.
Table of Contents
- Quarterly figures in the US could be crucial
- Federal reserve and ECB figures
- Figures regarding US consumer confidence
- Key European Central Bank interest rate decision
- US labor market report to close the week
Quarterly figures in the US could be crucial
This week, some of the biggest US technology companies present new quarterly figures regarding December’s Christmas period. Besides social media giant Meta, investors will be looking at the results and prospects of Apple, Amazon and Google's parent company Alphabet. Whether these four tech giants will be able to live up to their revenue and profit expectations is difficult to assess. Meta and Alphabet recently reported declines in online advertising. For Alphabet, Microsoft and Amazon, faltering cloud storage activity could negatively impact quarterly earnings and the outlook for the coming quarters.
While these services (online ads and cloud storage) remain the cash cow (generating a significant portion of quarterly profits), these sectors will not grow as strongly in 2023 as analysts expect. Based on declining sales of credit card providers Mastercard and Visa, Apple and Amazon's sales figures may also fall short of market experts' expectations. At Apple, the closure of iPhone manufacturer Foxconn (corona blowout) in December also negatively affected sales figures.
Federal reserve and ECB figures
This week, investors eagerly await the midweek decisions surrounding the Federal reserve and ECB (European Central Bank) interest rate figures. Before the US Federal Reserve announces its interest rate decision on Wednesday evening, market participants will look at the latest US consumer confidence figures from the day before. On Wednesday night, attention will turn to the US's top monetary authority, Fed chairman Jerome Powell. The market could move either way following his statements. On Thursday, his European counterpart, ECB chief Justine Lagarde, will be in the spotlight. The statements of these two presidents will have major implications for all financial markets. This will be followed on Friday by the publication of the important US labor market report (NFP).
Figures regarding US consumer confidence
Tuesday 31 January 2023: On the second trading day of this week, the Conference Board (CB) publishes new US consumer confidence figures for the month of December. Optimism about economic development in the US had recently rebounded significantly at 108.3, contrary to earlier forecasts. For the month of January, analysts expect a further increase in consumer optimism and foresee a value of 109.0. If this value is reached or even surpassed, the US dollar index (DXY) is likely to recover short term, which could have a negative impact on the price trend in the crypto market. On the other hand, if analysts' expectations do not come to fruition, this will again have a negative effect on US dollar strength, which in turn would be positive for Bitcoin prices etc.
Key European Central Bank interest rate decision
Thursday 2 February 2023: At 14:15 (CET), European experts will be look at Brussels. The ECB will announce its first major interest rate decision for the new trading year. With eurozone inflation still close to double digits (9.1% at the latest count), analysts expect a rate adjustment of another 50 points to 2.50%. A smaller increase of just 0.25 percentage points can almost be ruled out. In contrast, if monetary authorities raise base rates by 75 points, the euro-dollar exchange rate is likely to gain strength in an initial reaction. The corresponding consolidation of the US dollar index DXY could then have a stabilizing effect on equity and crypto prices. Market players will listen intently to what ECB chief Lagarde will announce about the development of monetary policy measures in Europe, as they did at the Fed's press conference a day earlier.
US labor market report to close the week
Friday 3 February 2023: On the last day of this trading week, the US non-farm employment figures (non-farm payrolls are a monthly statistic that shows how many people are employed in construction and goods companies in the US) for the month of January will be released. Experts expect a drop of 183,000 workers. This is significantly less than the last published employment figures for the previous month of December. Recently, 200,000 new jobs were expected three times in a row. Each time, this estimate was clearly exceeded. In December, 223,000 new jobs were created.
If market experts are right in their forecasts for January, the chances of an impending recession will increase again in the coming months. Weak NFP figures could reinforce the US dollar's correction, which in turn is positive for the already rising bitcoin price. If the labor market remains resilient like the previous months, it will not necessarily lead to a correction in the equity and crypto markets. After the release of the last set of figures (the beginning of the year), the stock and crypto markets immediately went up.