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US Futures Off Its Lows, Busy Economic Data Week Ahead

US Futures Off Its Lows, Busy Economic Data Week Ahead

The US and European futures are trading off their lows of the day while traders are ready for a flurry of economic data and economic events that will be unfolding this week. There is no doubt that 2022 was officially the worst year for the US stock market since 2008, but this also means that there are higher chances of bargain hunters jumping into the market this year, given the opportunity. For instance, the Dow Jones ended the year down by 8.85%, the S&P 500 fell by 19.4%, and the tech-heavy Nasdaq plunged 33.1%. There are some great names with decent valuations which could grab investors’ and traders’ attention.

In terms of economic data, on Wednesday, we are going to get the fresh reading for the US JOLTS number and fresh minutes of the Fed’s latest policy meeting will be released later in the same day as well. The minutes will be closely watched by traders and investors and are more than likely to set the trading tone for the rest of the week. On Friday, traders will get a fresh read of the US NFP data. In addition to this, there are a number of Fed speeches throughout this week that are going to keep the noise level quite high as the difference in their views of the Fed’s policy will make traders more confused.  

Geopolitical tensions 

2023 has started with further escalation of tensions between Russia and Ukraine as a missile strike on a Russian military facility in the occupied territory in Ukraine killed 63 troops. This is more than likely to trigger an even more aggressive response from Russia. Overall, it doesn’t look like 2023 has started with a calming of tensions between the two countries. It is more likely that the situation may actually become even worse after the current incident before becoming better.

UK 

Productivity in the UK is most likely to get hurt once again as rail workers are almost going to walk away for five days from work. The saga of strikes that began in the UK is mainly due to the cost of living crisis. It doesn’t seem like the government has any plan to tackle them. Only a few weeks ago, we saw nurses walking away from their critical work. It is highly possible that they may call for another strike as nothing was resolved.

The recession in the UK is highly likely to be one of the worst, and the country’s recovery would be the worst as well among the G7, according to many surveys. Inflationary shock and the government’s decision on the Ukraine war are likely to have a much longer impact on the economy as per the surveys. This means that the Bank of England (BOE) is likely to remain in the spotlight. Their monetary policy would continue to support higher rates for longer.

Asia 

In Asia, the markets opened the first trading week of the year with a tight range of prices.

Additional decreases in industrial activity were shown by the Caixin purchasing managers’ index due to the rising number of Covid infections. The poll also revealed that company optimism over the forecast for output over the next 12 months has increased to its highest level since February and this is due to the improvement in covid related policies. 

The Bank of Japan is allegedly contemplating raising its inflation estimates in January to reflect a price increase that’s closer to the 2% objective it has set for the 2024 fiscal year.

BTC

Bitcoin has started the year on a positive note and the price is trading in the green. One of the biggest questions for traders and investors going into 2023 for Bitcoin is the future price prediction. There are many in the market who believe that the bear cycle isn’t fully complete yet, and the price could shift further to $10K. However, one thing is for certain, and that is there is more pessimism that is baked into the price action now than ever before. That means that there is a limited downside to the BTC price. It is likely that we may see the price action moving higher. Traders believe that in 2023 Bitcoin price will easily retest the 50K price level if not its all-time high, as few bears are left now.